The Nation Newspaper

Tag: LNG

  • ‘Planned LNG projects to generate $15b’

    ‘Planned LNG projects to generate $15b’

    The three Liquefied Natural Gas (LNG) projects – Brass, Olokola and NLNG train 7 – which are yet to begin operation, have combined capacity to generate $15 billion yearly for Nigeria and increase the government’s revenue by $5 billion, Managing Director/CEhief Executive Officer, Nigeria LNG Limited, Mr. Babs Omotowa has said.

    Omotowa, who spoke on the need for government to expedite action in bringing on-stream these projects, lamented the delay in their take off. Nigeria, he said, produces eight per cent of proven global natural gas and has the capacity to increase it to 15 per cent if the three projects can become operational.

    He said the Brass LNG, which has capacity for 10 metric tonnes per annum (MTPA) has been delayed for four years, Olokola LNG located between Ogun and Ondo States with 12.8mtpa production capacity, has been down for three years and NLNG train Seven, with 8mt/a production capacity, has been delayed for five years. If the three plants become operational, they would have a combined production capacity of 30mtpa.

    Omotowa criticised the delay in view of the economic disadvantages following new NLNG plants springing up in some parts of the world, that are expected to join in the competition for markets and the increasing output from shale gas from world’s top gas consuming countries, such as the United States and China. The implication, he explained, is that the two countries are gradually turning from being net consumers to net producers, and eventually net exporters.

    He said to maximise value from its gas resources, government should optimise exploitation of its abundant gas reserves estimated at 187 trillion cubic feet for the benefit of the citizenry. He said fast-tracking the building of the three gas projects will not only free generate resources to develop the economy, it would also checkmate the eventual competition from other global gas suppliers.

    He said: “With 22mtpa, NLNG generates $12 billion per year. With additional 30mtpa, Nigeria could generate additional $15 billion revenue annually to the Federal Government’s coffers, as well as generation of 50,000 construction jobs from the three projects.

    He explained that as a result of shale gas LNG, importers are now self-sufficient, becoming exporters and in competition with Nigeria. For instance, United States and Canada have approved six LNG projects worth 25 per cent of current global demand. Proven shale gas reserves are 7,299 trillion cubic feet,” he added.

    Omotowa said in the global energy mix, gas is the world’s fastest-growing energy. Gas, he said, will outstrip coal and be number two by 2035, while LNG will grow from 2.5 per cent to four per cent by 2035. He said global LNG demand will by 2030, double the 2012 level of 238 million metric tonnes, which largely will be dominated by the Asian countries of India, China Japan, South Korea and Taiwan.

    He noted that though Nigeria has one of the highest gas reserves, ranking ninth, with Russia, Iran and Qatar topping the list, its consumption and export ranks lowest among its peers.

  • The NLNG paradigm

    The NLNG paradigm

    • Why doesn’t NNPC adopt the NLNG model for refinery and petrochemical complexes?

    It came with so many flaws, including nearly a decade-long delay; monumental graft, notably the bribery- for- contract scam by Halliburton and finally a not-too-transparent modus operandi. But regardless of all these, the Nigeria Liquefied Natural Gas (NLNG) project is probably the biggest thing happening to Nigeria and her oil industry today. It is by far her most ambitious and most successful project.

    The NLNG platform on the Bonny Island offshore from Rivers State was in the news recently when it marked its 3000th LNG export cargo milestone. According to its elated managing director and chief executive officer, Mr. Babs Omotowa, Nigeria has earned over $50 billion from the export of liquefied natural gas in the last 15 years. This huge earning, according to Omotowa, grew from a meagre investment of about $2.5 billion at inception in 1999.

    The NLNG is a star project of the joint venture between the Federal Government as represented by the Nigerian National Petroleum Corporation (NNPC) and international oil companies. Nigeria owns about 49 per cent equity while firms like Shell, Chevron and Agip own majority shares. The NLNG, which is developed in trains is now at its sixth. The seventh train is in the making and upon completion, NLNG will control 10 per cent of the world’s liquefied natural gas market.

    It is the single largest oil and gas project since oil production started in Nigeria over 50 years ago (perhaps only to be matched by Shell’s Bonga) and NNPC’s assets in the project have grown to $14 billion over 15 years. Nigeria has earned about $13 billion in dividends and another $11 billion earned in the sales of feed gas while more than $10 billion has been injected into the Nigerian economy by way of goods, services and emoluments to thousands of staff. NLNG has also been rated among the companies that have adopted best practices in social responsibility to its communities and corporate governance in managing its affairs.

    This is especially so after it rose from the ashes of a macabre scandal involving its contractors and Nigerian government officials which spanned various regimes. With the culprits convicted and punished in the United States, NLNG introduced fresh set of strict ethical conducts in all its transactions at all levels and benchmarked against the best corporate governance practices in the world.

    Though the earnings over 15 years may seem meagre considering the magnitude of the project, the bigger gains lie in providing quality jobs and affording world-class training to thousands of Nigerian youths, especially its technical staff. NLNG’s corporate social responsibility (CSR) activities span almost all spheres of life but most notable is providing free electricity to its immediate communities of Bonny and Finima. The NLNG Annual Award for Science and Literature for Nigerians is among the most rewarding and most prestigious in the world today. But most important of all is that the NLNG has been able to reduce gas flaring in Nigeria by some fraction. It has been able to put into lucrative use, gas that otherwise would have been flared. Nigeria is second only to Russia in gas flaring in the world and she is said to lose aboutN286.24 billion to it.

    We wager that if the NNPC had adopted the NLNG template for the development of Nigeria’s refineries and petrochemical projects, the country would not only have been a major exporter of petroleum products but it would have long overgrown her perennial fuel and energy crises that still continue to dog her. The country would have also developed ancillary industries in the oil and gas sector as well as deepened her local content, technical and technological expertise. The NLNG is a success story and we applaud it as it celebrates this milestone. It remains an oasis in an ocean of rot and despondency.

     

  • SON plans guidelines for LPG

    The Standards Organisation of Nigeria (SON) is planning to issue guidelines for the Liquefied Petroleum Gas (LPG) to be used by consumers, it has been gathered.

    It was also gathered that the rules would give details of the properties of the LNG otherwise known as cooking gas to be used in the country.They are coming on the heels of the review by SON to ascertain the quality of LPG coming to Nigeria from Niger Republic.

    SON’s Deputy Director , Obiora Manafa said the development became necessary to prevent consumers from using LPG that are certified.

    He said a quantity of LPG consists of two properties namely; butane and propane, adding that there is the need to ensure that LPGs in use meets the Nigerian specification.

    He said: “A technical committee comprising stakeholders in the LPG value chain was set up recently. The committee in conjunction with the SON undertakes a review of the LPG components. We have arrived at standard LPG, and this is awaiting the approval of the Council of SON. We have deliberated on the issue, and the approval would be given soon. In fact, the director-general, SON, said the approval would be given anytime.

    “Once the standard is out, Nigerians would know whether the LPG standard from Niger Republic is complying with our own and from there take a position,” he said.

    The Nigerian Liquefied Natural Gas (NLNG) produces 95 per cent of the LPG used in the country. Nigeria’s LPG specification is 95 per cent butane and five per cent propane.

    It was learnt that the reason is because high butane is meant for countries in the tropics such as Nigeria, However, the decision of Niger Republic to import LPG with the highest propane quality made the government, SON and other stakeholders to contemplate the review.

  • LNG exports landmark 3000th cargo

    LNG exports landmark 3000th cargo

    Nigeria LNG Limited (NLNG) has exported its 3000th cargo of Liquefied Natural Gas (LNG) from its Bonny Island Terminal in Rivers State.

    The milestone cargo’s destination is Marmara LNG Terminal for Botas Petroleum Pipeline Corporation in Turkey. The cargo will be shipped onboard one of NLNG’s vessels, LNG Lokoja.

    According to a statement, this milestone transaction highlights NLNG’s long-standing contribution to the sustainable reduction of gas flaring in Nigeria, monetisation of the nation’s gas resources and revenue generation, all in fulfilment of the company’s vision to help build a better Nigeria.

    Its Chief Executive and Managing Director Babs Omotowa said: “I am naturally delighted by NLNG’s attainment of this important production milestone, especially because it demonstrates what is possible as a result of a shared vision within our company.”

  • Labour shortage threatens $50b LNG plans

    Labour shortage threatens $50b LNG plans

    Energy companies trying to raise almost $50 billion for Canada’s first network of natural gas export terminals will face an even more basic challenge: finding the workers to build them.

    Housing complexes boasting an indoor golf driving range, a two-storey gymnasium and a private movie theater are among perks companies are mulling to lure tradesmen to Canada’s remote, snow-swept West Coast and mitigate wage inflation that could blow up project budgets.

    Labour shortages in the country already have pushed wages for some oil and gas workers as much as 60 percent higher than their counterparts in the United States, according to U.S. and Canadian labour data.

    “The lack of skilled workers is a major component for the reason why you’re often behind schedule and over budget,” said Geoff Hill, partner and oil and gas leader at financial advisers Deloitte Canada in Calgary. A dearth of labor for oil sands and mining will be “exacerbated” by a new wave of construction to enable gas exports, he said.

    Chevron Corp. (CVX) will need as many as 5,500 workers to build a pipeline across Canada’s western mountains and a plant on the country’s frosty Pacific Coast for shipping gas to Asia, according to company estimates.

     

  • Court to rule on LNG blockade on Monday

    Court to rule on LNG blockade on Monday

    he Federal High Court, Lagos has delayed ruling on a tax dispute between the Nigeria Liquefied Natural Gas (NLNG) and the Nigerian Maritime Administration and Safety Agency (NIMASA) over taxes until Monday, extending a deadlock that is costing $22 million a day in lost gas exports, according to an economist.

    Reuters reports that since June 21, NIMASA has barred NLNG cargoes from entering or leaving the loading bay at the Bonny terminal in the Niger Delta because it says NLNG is not paying a 3 per cent levy, from which the NLNG argues it is exempted.

    The parties were in court in Lagos yesterday to try to resolve the dispute over the lawfulness of the blockade and the levies, which NLNG spokesman, Kudo Eresia-Eke, had earlier said he hoped would be resolved.

    The court adjourned the case until Monday.

    The Federal Government owns 49 per cent of NLNG with Shell Petroleum Development Company (SPDC) holding 25.6 per cent, Total 15 per cent and Eni 10.4 per cent.

    LNG accounted for 9 per cent of Nigeria’s exports in 2012, said economist Bismarck Rewane, the CEO of Lagos-based consultancy Financial Derivatives, or roughly $8.1 billion a year, a quarter of Nigeria’s federal fiscal budget for 2013.

    “That’s about $155 million a week, of which 51 per cent belongs to the Nigerian government,” he said. “That is a lot of money to the Finance Ministry.”

    NLNG declared force majeure on gas exports on June 28 because of the blockade.

    Eresia-Eke declined to give figures for NLNG losses, and officials of the Ministry of Finance were not immediately available.

    NIMASA spokesman, Isichei Osamgbi, said the agency was seeking cumulative levies of $158 million.

    “Our business is not to cause any crisis to the gas sector. We just insist on our dues. Why shouldn’t they pay the levies that are applicable to anybody?” he said.

    NLNG argues that the act that established it makes it exempt, but Osamgbi said the exemptions expired after the first year of profit, following a five-year holiday.

    A shipping source said NIMASA already charges LNG tankers $600,000 per berth to load at the NLNG bay, four times higher than the average among the highest fees of any LNG port.

    NLNG says a court order was issued on June 18 preventing NIMASA from blockading the port until a resolution was found, but the maritime agency denies that.

    Buyers of Nigeria’s LNG include Spain’s Repsol, Italy’s Enel, Britain’s BG Group France’s GDF Suez and Portugal’s Galp.

  • Nigeria’s LNG may stagnate till 2015, says ExxonMobil boss

    Nigeria’s LNG may stagnate till 2015, says ExxonMobil boss

    The increasing production of oil and gas from unconventional sources and terrains especially from shale, may affect Nigeria’s oil export and gas. This is because it is estimated that liquefied natural gas (LNG) production is likely to remain stagnant at 22 million metric tons per year till 2015, just as the global market share of LNG has continued to drop.

    The Managing Director of ExxonMobil upstream operations in Nigeria, Mark Ward, who disclosed this, noted that oil-consuming countries such as China and Japan are looking at alternatives that would ensure steady supply of oil and gas to them as the United States.

    According to reports, the United States would soon be self-dependent in oil and gas productions from shale, which may negatively affect Nigeria particularly as the United States has over the years been the major importer and consumer of Nigeria’s oil.

    Ward, who was the guest lecturer at the 2013, Aret Adams Lecture held in Lagos, said that although the United States has been a marginal consumer of Nigeria’s LNG, the fear is that shale gas production would soon make the U.S. a net exporter of LNG, which may make it difficult for Nigeria to find market for its LNG.

    The ExxonMobil chief noted that according to the Energy Information Administration (EIA), Nigeria exported 17.97 million metric tons of LNG in 2010, making the country the 5th largest LNG exporter in the world and the largest LNG exporter in the Atlantic Basin. Europe, with 67 per cent is Nigeria’s biggest export market. The U.S. imported 0.86 million metric tons of Nigerian LNG (five per cent), or only one per cent of total U.S. LNG imports.

    He said: “So, while we see that the U.S. is not a significant export market for Nigerian LNG, the real danger to Nigeria lies in potential U.S. export of her shale gas to global LNG market.

    “Indeed in 2011, the impact of the U.S. shale gas boom was not felt by Nigeria because more of the country’s LNG exports went to Japan, where Nigerian exports tripled due to increased LNG demand following the Fukushima nuclear accident.

    “However, we know that quite a few countries (notably Australia and China) are interested in applying the technology which has allowed North America to unlock unconventional gas,” he said.

    Although there are concerns that these countries may not achieve the same success as the U.S., Ward said that while current forecast is that similar commercial production remains some years away, the point to note is that interest in unconventional production is growing, even in Europe, Nigeria’s biggest LNG market.

    He added: “It is worth pointing out that Nigeria’s share of global LNG market dropped in 2011, from 10 per cent to seven per cent, mainly due to lack of recent capacity increase and rising production from Qatar and Australia. Nigeria’s estimated LNG production capacity is currently 22 million metric tons per year, and no major increase is expected to come online before 2015.

    “With Nigeria’s proven natural gas reserves put at an estimated 180 trillion cubic feet as of end 2011 – the ninth largest in the world – the country needs to open up her market and focus on being a competitive, low-cost, high-reliability supplier to the global market.”

     

  • NAPE frets over future of LNG business

    NAPE frets over future of LNG business

    The Nigerian Association of Petroleum Explorationists (NAPE) has expressed worry over the future of the liquefied natural gas (LNG) business, which Nigeria banks on as one of the major and future income sources.

    Technology is gradually eroding the anticipated prospects and hope of natural gas as a major income stream of the Federal Government.

    The association had at a press conference it held in Lagos to announce its plans for the forthcoming pre-conference workshop, which will hold in Lagos next week, said that development of shale gas is seriously threatening the future of LNG. The group particularly expressed fear that the development would stall new LNG projects in Nigeria.

    In his presentation, NAPE President, Dr. Mayowa Afe, who was represented by the President-elect, Mr. George Osahon, said: “Natural gas is the fastest growing energy resource in most regions of the world owing to its abundance and relatively low carbon content that makes it more environmentally acceptable compared to coal or crude oil.

    “However, gas transportation from producing locations to areas of consumption could be capital intensive which probably accounts for the large volume of stranded gas in the country. This encourages flaring while constraining its widespread utilisation in various industries including the power sector.

    “Development of shale gas in different parts of the world has become a game changer in the global energy mix, having forced the Henry Hub reference price of gas to less than $3 per million British thermal unit (Btu) from about $7/mBtu just a year earlier. The situation is likely to stall new LNG projects with implications for Nigeria’s huge gas resources.”

    The pre-conference workshop, which holds at Eko Hotel in Lagos, ushers in NAPE’s annual international conference and exhibition, which will also hold at the same venue between November 11 and 15.

    The theme of this year’s preconference is “The economic imperative for the local utilisation of Nigeria’s gas resources,” while the theme for the conference and exhibition is “Nigeria oil and gas exploration: the next frontier.”

    The Group Managing Director, NNPC, Andy Yakubu, Conoil Managing Director, Dr. Ebi Omatsola, President, Nigeria Gas Association, Chima Ibeneche, DPR Director, Osten Olorunsola, and Vice President Gas, Shell Petroleum Development Company of Nigeria Limited, Ubaka Emelumadu, will present papers at the pre-conference workshop.

    Topics to be discussed include international developments in the shale gas arena; domestic gas utilisation, challenges and opportunities, the journey thus far; and gas to petrochemicals: adding value for economic development.

    NAPE had over the years through the outcome of its pre-conferences, conferences and exhibitions influenced government’s policies on the oil and gas sector.

  • How Nigeria lost $2b to gas flaring last year – Gowon

    How Nigeria lost $2b to gas flaring last year – Gowon

    Nigeria flayed over $2 billion worth of gas last year, former head of state, Gen. Yakubu Gowon, has said.
    Gen. Gowon spoke on Wednesday in Finima, Bonny Island, Rivers State.
    The former Head of State, who was on a visit to the Nigeria Liquefied Natural Gas (NLNG) Plant on the Island, said the country would have more money for development projects by ending gas flaring.
    He said the country has to ensure that steps were fast-tracked to complete the NLNG Train Seven and other LNG projects to end gas flaring.
    He said countries such as Qatar have taken over the leadership of the LNG market from NLNG, which used to be the fastest growing in the world.
    He said: “Think of how much cash, sorry gas, we burnt between when we found oil in 1957 and when Nigeria LNG was able to start monetising our gas resources in 1999. Last year, this country flared over 460 billion standard cubic feet of gas that, if processed and exported, would have fetched the country over $2 billion and minimised the health and environmental impact of gas flares.
    “Think of how oil palm industry left Nigeria for Malaysia. Think of how athletics – we won Gold at the Sydney Olympics 12 years ago – left Nigeria to Jamaica. And the worst of all, countries we started out with in the LNG business have all left us behind.”
    Gen. Gowon lamented the country’s loss of the leadership of the LNG market.
    “Nigeria LNG Limited used to be the fastest growing LNG plant in the world. But for the past five years, a country like Qatar has moved from 20 to 80 million tonnes range, whilst a country like Australia has made final investment decision to build LNG projects up to 80 million tonnes. I now understand that Mozambique and Tanzania will soon be joining the gas producers with the export of LNG,” he stated.
    He urged the Federal Government to ensure all the LNG projects were completed.
    The former Head of State said: “All the LNG projects on the drawing board in Nigeria (NLNG Train Seven, Brass LNG, OKLNG) will add about 30million tonnes of LNG to our national output, which is not that much when we compare with Australia, which has only 60 per cent of our reserves but effectively generates much higher domestic electricity and will soon be exporting much more LNG than all the LNG companies in Nigeria combined.”
    He warned of the consequence of not acting on time.
    “So, I am still not completely fulfilled that we haven’t reached our destination in that journey we started so long ago. I am worried that history is about to repeat itself as other players (including the United States, a previous importer now a net exporter) will get to the global market ahead of us and it may be another 30-50 years lost. I will not like to see another great opportunity lost due to our lethargy.
    We can’t afford to sit on the fence any longer,” Gen. Gowon noted.