Nigeria Targets 10% Global LNG Share (WGC Update)
(Adds comments by NLNG CEO)
At the World Gas Conference in Washington DC, which concluded June 29, state-owned Nigerian National Petroleum Corporation's group managing director Maikanti Baru encouraged investors to consider his country's gas sector.
Speaking June 26, he talked of expanding the country's Nigeria LNG venture, and of exploring the possibilities of the country's natural gas sector which has one of the highest reserve bases in the world.
Baru said the current Nigerian government sees that, with emerging markets and the need to generate more power across sub-Saharan Africa, there is an unprecedented scope to invest in African gas. He added that the Nigerian government is focused on jump-starting the gas sector to position Nigeria as the regional hub for gas-based industries.
"We are focused on sustaining gas supply to support a rapid growth in power generation, and leveraging our enormous reserves position to strengthen our footprints in high-value gas export through LNG and regional gas pipelines," he said.
Nigeria wants to expand the existing 22 million metric ton/yr capacity Nigeria LNG (NLNG), by adding a 7mn- 8mn mt/yr Train 7 and thereby targeting a 10% share of the global LNG market, added Baru. A similar investment appeal was made by NLNG's CEO Tony Attah at a major international gas conference in Lisbon late last year. NNPC is the largest shareholder in NLNG, with a 49% interest.
After stalling for a decade, some think NLNG-7 may now have legs. Consultancy Rystad Energy this week said that Nigeria (through NLNG T7) is one of a few countries – alongside Mozambique and Papua New Guinea – that may in the late 2020s challenge the Top-5 incremental LNG developers for market share. Total too has said that NLNG-7 could be a low-cost project. Rystad though doesn't expect any NLNG-7 investment decision this side of 2020.
Nigeria (NLNG is the country's sole LNG exporter) was the fourth largest source of global LNG imports in 2017, with a 7% worldwide market share, supplying 20.34mn mt according to Paris-based GIIGNL.
Baru also said June 26 the Nigerian government recently approved three-pronged reforms in the gas sector, including a domestic gas supply obligation, a gas pricing policy, and a gas infrastructure blueprint.
Some however see – in Nigeria – a country where agreements are signed with no concrete details, investments are touted with no follow-ups, and where most of the progress announced by the government representatives are not reflected in the sector. There is so much talk without follow-up actions, and this is as true under President Muhammadu Buhari's tenure since 2015 as his predecessors'. Some risk-takers have been left high and dry, despite having invested in projects that would have a palpable benefit to local energy needs.
Analysts have said that the government's passing of the Petroleum Industry Bill (PIB) should tackle some misgivings that potential investors have about Nigeria's gas sector.
Speaking to NGW, a member of Nigeria's House of Representatives gas committee Garba Gololo asserted that the National Assembly was working to ensure a proper amendment and swift passage of the PIB.
Final investment decision on T7 'this year': Attah
WGC, Washington DC: Attah told NGW that as well as adding Train 7, for which it has secured sales and purchase agreements mostly with existing customers, the company was still re-marketing 9mn mt/yr of uncommitted LNG. It wants to sell this on term contracts, he said, as it was too big a volume to commit to the unstable spot market. The market is not ready yet, he said, despite praising his company's commercial dexterity. A quarter of the plants' original 22mn mt/yr output had been aimed at the US, which is now an exporter of LNG.
Train 7 is to be built by two consortia: the old team of KBR and JBC; and another linking Saipem and Chiyoda, he said. He hopes that a final investment decision will be taken this year.
He told the conference that the best approach to take was flexibility: "We need long term, short term and a mix of indexation," he said: "Why would a buyer want Henry Hub pricing, if he had no interface with the Henry Hub?" He also said that, after some years of uncertainty and very few final investment decisions being taken, today was "the best time" to be involved in the LNG market. There is a huge demand for energy and it must be clean energy, he said, comparing the LNG industry favourably with the bleaker future facing the tobacco or coal businesses.