^ Early works at the Bonny Island Train 7. Source: NLNG

Article By Ellie Pritchard

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NLNG Bonny Island
Existing trains at the NLNG Bonny
Island complex. Source: NLNG

Niger Delta
NLNG’s facility is situated on Bonny
Island in the Niger Delta where the
company converts natural gas into
LNG. Source: RHDHV (2018)

 

 

NLNG has high ambitions for its latest project. “The long-awaited expansion will increase production capacity by 35 per cent from 22mtpa to 30mtpa and enhance NLNG’s competitiveness in the global market” (nigerialng.com).
NLNG is comprised of the Nigeria National Petroleum Corporation (NNPC) and international oil majors Royal Dutch Shell, ENI and Total. The joint-venture was formed to explore the huge potential of natural gas reserves in Nigeria. By 1999, only ten years after its formation, the company had completed the first two of its currently six train LNG-facility.

New train and new facilities

Twenty years later and NLNG is about to build train 7. In its executive summary of the project, NLNG writes that number 7 entails the following: “Construction and operation of a new complete train (known as the Complete Train, CT) and a Common Liquefaction Unit (CLU) which will take gas from the existing trains and the new train 7; and new marine facilities including a new LNG-jetty. A village will also be constructed to accommodate some of the construction workforce. The train 7 project will increase capacity of NLNG’s facility by 7.4 mtpa of LNG. The proposed train 7 project will receive feed gas through a dedicated gas transmission system and will produce LNG, condensate and LPG (mainly propane and butane). The capital investment for the project will be in the order of 3 to 5 billion USD subject to final design and scope with a design life of 25 years” (NLNG).

 

Journey Map
July 2018
Signing of Front End Engineering Design (FEED) with two consortia in a Dual FEED Process.
Guarantee Trust Bank of Nigeria and Sumitomo Mitsui Banking Corp. (SMBC) appointed as Financial Advisers for the Project.
March 2019
NLNG and Nigerian Content Development Monitoring Board (NCDMB) signed off an approved plan for Nigeria Content (NC) for NLNG’s train 7-project.
September 2019
NLNG issued a Letter of Intent for the Engineering, Procurement and Construction (EPC) Contract of the Project to SCD JV Consortium.
SCD JV Consortium is made up of Saipem of Italy, Japan’s Chiyoda and Daewoo of South Korea.
December 2019
NLNG’s shareholders took the Final Investment Decision (FID) for its Train 7 Project.
May 2020
NLNG awarded the Engineering, Procurement and Construction (EPC) Contracts for its Train 7 Project to the SCD JV Consortium, comprising affiliates of Saipem, Chiyoda and Daewoo.
(Source: NLNG.com)

A bold start
The ambitions of the company are reflected by the signing of what the law firm White & Case refers to as a “historic” corporate loan. The financing package of USD 3 billion was secured in May 2020 at a volatile time for the oil and gas sector, further impacted by the repercussions of the Coronavirus pandemic. But NLNG has a track record of successful expansion projects, which all came in under budget and within three months of the scheduled completion date.
“From the financiers’ perspective, NLNG’s experience in completing expansion projects and the technical and operational support provided by Shell Gas Nigeria BV mitigated NLNG’s construction and operating risks for train 7”, says Chike Obianwu and Zelda Akindele (both of Nigerian law firm, Templars) writing for White & Case.
The report goes on to specify the financial interest generated by the project. Funding comes from a diverse group made up of 26 international and Nigerian commercial banks, two development and finance institutes (Africa Finance Corporation and African Export-Import Bank, Afrexim), and export credit agencies Korea Trade Insurance Corporation (KSure), the Korea Export-Import Bank (K-EXIM), and SACE.
Despite the enthusiastic financing, the project has not escaped the complications of the Coronavirus pandemic. In its African Energy Outlook 2021, the African Energy Chamber stated that the Nigerian oil and gas sector would lose investments up to USD 24 billion between 2020-2025, roughly 30 per cent of the USD 80 billion loss anticipated across the whole of Africa’s petroleum industry.
“Although Nigeria approved the development of NLNG’s train 7 last year, the upstream gas developments that were planned to supply feed gas to this development might now take a back seat,” explained the AEC. It is an issue reflective of the global investment environment, and yet this would be an unfortunate blemish on NLNG’s reputation for timely and within budget completions.

 

 

References:

 

• Africa Focus: Autumn 2020 – White & Case
• Nigeria’s gas projects, NLNG Train 7 feed gas developments to suffer delay – Sweet Crude Reports, 2020
• Market Report: NNPC Discusses NLNG Train 8 Construction – Africa Oil and Power, 2020
• Final NLNG Train 7 Project Environmental, Social and Health Impact Assessment – NLNG, 2019
• Sub-Saharan Africa – S&P Global, 2021
• Decade of Gas – Energy Focus Report 2020
• Nigeria LNG

Train 8 and beyond
But the company’s ambitions are not to be dissuaded. Towards the end of 2020, the Nigerian National Petroleum Corporation disclosed that it had begun talks over a further expansion of the NLNG facility. In a move to further monetise the gas resources in Nigeria, the NNPC hopes to drive employment rates up and expand the local economy (Africa Oil and Power, 2020).
Nigeria’s progression towards becoming a ‘gas nation’ manifests the hopes of the African content as a whole. As discussed on page 56, many African countries are making strides to becoming global gas exporters.
Previously led by Northern African export countries such as Egypt and Algeria, the Sub-Sahara region now looks set to compete.
The African Coalition for Trade and Investment in Natural Gas (ACTING) is reported by S&P Global: “By 2025, sub-Saharan Africa will house four onshore LNG terminals and three FLNG units, able to export 60 million mt/year of LNG.”
NLNG’s train 7 will be a key component of Sub-Saharan Africa’s future as a gas exporting region, and in the continent’s energy transition as a whole.

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