The Impact of the Development of LNG Train 7 in Nigeria

Proshare

Wednesday, July 18, 2018 11:02 AM /FDC 

The Nigeria Liquefied Natural Gas (NLNG) used to be the fastest growing LNG Company globally, with the development of new trains between 2000-2007. However, since train 6 (in 2007), no new train has been developed. The 6 trains have a total production capacity of 22mn tonnes/annum of LNG and 5mn tonnes/annum natural gas liquids (NGL) from 3.5bn cubic feet of natural gas reserves. This has been detrimental to NLNG and Nigeria at large as LNG contributes only 9.6% to the country’s export earnings. 

In October 2017, approval for the Final Investment Decision for the production of the Bonny Train 7 was given by NLNG Ltd. The Bonny NLNG is one of the biggest success stories of the Nigerian oil and gas industry since it began operation in 1995, as the project has generated approximately $90bn in revenue, $30bn in dividends and contributed 4% to the country’s Gross Domestic Product (GDP) since inception. 

In the build-up to-wards the FID in 2018, NLNG Ltd is seeking $7bn from the global financial markets for the sustainability of its operations through investment in Nigeria’s upstream gas sector, and expansion project. The project is expected to increase total production capacity by approximately 36% to 30mn tonnes/annum.

 

Impact 

The project is advantageous for both Nigeria and NLNG Ltd. The expected increase in production capacity would increase Nigeria’s gas ex-port, enabling the country regain its place as one of the top three gas exporters globally, and encourage diversification of energy resources. An increase in gas exports will boost LNG export earnings by 17% to approximately $5.13bn. This will create more buffers to enable the CBN sup-port the naira. In addition, it would boost fiscal revenue through royalties, profits and taxes from NLNG Ltd. 

The project is expected to cut down poverty through the creation of massive job opportunities. Consecutively, this will increase fiscal and forex revenue thereby boosting industrialization which will drive economic activity and growth. 

In addition, it is expected to improve electricity distribution and kick-start Nigeria’s power industry as sporadic power supply continues to persist due to constant gas constraints. So far in July, gas constraints accounted for 59% (30,192MWh/h) of total constraints (50,945MWh/h) in spite of Nigeria’s 192 trillion standard cubic feet of gas reserves. This will help ensure long term energy security and re-duce environmental hazards associated with gas flaring. Furthermore, the project aims to rebuild investor confidence in Nigeria.

 
Proshare Nigeria Pvt. Ltd.

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