Nigeria started commercial oil export in 1957 but only produced its first LNG 42 years after, in 1999. I am aware that Nigeria LNG Limited has, in just 13 years of production, brought in over $51 billion in revenue, delivered $9 billion dividends to Nigeria and paid $10 billion to the Joint Venture companies. If you do a simple math, you will see that the Nigeria LNG project would have earned $130 billion over the 35 years of inactivity.
It is therefore very disheartening if one stops for a moment and thinks about how different this country would have been if we had the benefit of an LNG plant since the 1960s. Think of how much money the nation would have made from gas export; how many roads, how many schools and how many jobs would have been created in Nigeria in the 35 years the LNG plant was sitting idly on the drawing board.
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.
History recorded that the windows of opportunity to build LNG plants disappeared in both the 1960s and 1970s – the two times we came so close to building an LNG plant in Nigeria, when due to delays in reaching decisions, other countries, especially in Europe (i.e. North Sea) got to the global market earlier than we did. But opportunities do not disappear; they go elsewhere, especially when we fail to utilise them.
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.
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.
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% of our reserves but effectively generates much higher domestic electricity and will soon be exporting much more LNG than the all the LNG companies in Nigeria combined.
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 USA, 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. The time to build Train Seven is now!
Nigeria LNG Limited has become too much of a good example to be allowed to fail; too much of a national beacon to be allowed to stumble; too much of a winning model to switch midstream.
Like the Nobel laureate, William Faulkner would say, I hope that this company’s success will not merely endure; it will prevail. We live in very perilous times, that even only to endure, nations and companies must prevail – over an accelerating technology that threatens to escape their control and over volatile markets that obscure hard work and make success seem like lottery.
I have in private discussions with the management of Nigeria LNG Limited been assured that Train Seven will provide no fewer than 10,000 construction jobs; will attract over $8 billion in Direct Foreign Investment with its strong balance sheet; and will increase monetisation of gas resources, otherwise still being flared.
With a proven gas reserve in the country of 187 trillion cubic metres estimated to last 109 years and unproven reserve of about 600 trillion cubic metres expected to last about 300 years, Nigeria has the 7th largest gas reserve and is not gas-challenged; it is only gas-infrastructure-challenged. We have more than enough gas to meet our entire domestic and export market commitments several times over!
It’s seven years since activities leading up to Train Seven started in September 2005, five years since Sales and Purchase Agreements were executed with five international buyers, and five years since Pre-FID construction activities started in April 2007 with $300m spent so far on such activities as soil preparation, preloads, and geotechnical investigations on Bonny Island. We no longer can afford to delay or dither.
As a former President and a statesman who constantly prays for this country, including for us not to repeat the mistakes of the past, I urge the government and the shareholders not to let this happen. Let’s build Train Seven now before the window of opportunity goes away to other countries.
I gather that the Honourable Minister for Petroleum Resources, Dr. Deziani Allison-Madueke, and the former Group Managing Director of Nigerian National Petroleum Company (NNPC), Mr. Austen Oniwon, publicly announced that Train Seven FID will be taken by 2013. This is good.
It is important to provide the market and investors comfort at the highest levels that the FID will be taken from 2013, which will also ensure that all stakeholders follow up with the work necessary to ensure that this happens. It will also go a long way to assure the market that Nigeria is serious about meeting this time table, this time around, and when the history of NLNG is told, the resolve and prescience of the current government in making it grow, will be rewarded with high praise.
