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$5bn Train-7 NLNG Project Reaches 52% Completion Level

: Seplat Energy General Manager, Makinde, said the main problem of Nigerian oil and gas industry was not lack of policy but implementation.

The Nigeria Liquefied Natural Gas Limited (NLNG), on Monday, stated that the ongoing construction of the $5 billion Train-7 project being undertaken at Finima, Bonny Island, Rivers State, was at 52 per cent completion rate and currently engages 8,300 Nigerians. 

This was revealed when the management of NLNG, led by its Managing Director, Dr. Philip Mshelbila, held an engagement session with Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Simbi Wabote, at the gas company’s operational base in Bonny Island.

The engagement came as renowned oil and gas expert and Executive Chairman of AA Holdings Limited, Mr. Austin Avuru, for the umpteenth time, called for measures to retool the ailing Nigerian petroleum sector. 

Avuru stated that investments worth about $7.6 billion was required to ramp up the country’s oil production to its former 2.1 million barrels per day (mbpd) in the next two years.

A statement from NCDMB noted that the high-level engagement was part of a three-day Nigerian content stakeholders’ retreat, which provided a platform for the two industry leaders to sign an agreement on the oil and gas e-market place.

The agreement would see the rollout of tender opportunities from NLNG on the e-market electronic platform, thereby implementing a key provision of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act.

The oil and gas e-market place is a virtual platform for buyers and sellers of goods and services in the oil and gas industry. It is expected to allow for speedy and transparent transactions.

Mshelbila stressed that the relationship between his organisation and NCDMB had been conscientiously nurtured over the years, with both parties striving ceaselessly to fulfil statutory obligations. He acknowledged the crucial role played by the board in the take-off of the Train-7 project and assured of the company’s resolve to stretch its local content practice beyond mere compliance with the provisions of the NOGICD Act.

“We cannot have a better Nigeria unless we develop the capacities of Nigerians,” Mshelbila stated. He restated the vision of his company to be, “a globally competitive LNG company, helping to build a better Nigeria.”

Mshelbila bemoaned the difficulties the company currently faced in getting adequate gas supply and the resultant under-production by its six plants to below 50 per cent of their total installed capacity.

He said feed gas to the NLNG plants came mainly from some of its joint venture (JV) partners, including Shell Petroleum Development Company (SPDC) Limited, Total Energies, and Nigerian Agip Oil Company (NAOC).

Mshelbila also lamented that their supply pipelines suffered recurrent vandalism, coupled with facility failure and low production from aging wells, resulting in serious disruption of supplies. He explained that NLNG was exploring several options to mitigate the challenge, including partnering with critical security agencies to curtail vandalism on the pipelines and working with their JV partners to increase their gas production.

He added that the NLNG board of directors had also given approval for the company to procure gas from other international and indigenous gas producers in the country, with the goal of enhancing the performance of Trains 1-6.

Mshelbila expressed deep concern that deep-water gas projects that would provide feed gas for the upcoming Train-7 and other future expansions had not been commenced by the international oil and gas companies (IOCs), despite the significant progress made in the construction of the Train-7 plant. He said the situation could lead to the completion of the plant without gas being available for it to liquefy.

He solicited the board’s support for the development of the deep-water gas projects, which were critical to keep Trains 1-6 full and provide gas for Train 7 and future expansion plans.

Responding, the executive secretary of NCDMB affirmed that the e-marketplace would be a game-changer that would enhance the Service Level Agreement (SLA) guiding the relationship between NCDMB and NLNG. He noted that the board decided to start with NLNG because of the company’s record of excellence.

Wabote said the intention of the e-marketplace was to increase transparency in the tender process, remove human interference in business processes, move things electronically, and achieve better results. He described the Final Investment Decision (FID) and other critical steps that were taken for the Train-7 project at the height of COVID-19 as proof of stakeholders’ enthusiasm for the project.

However, Wabote expressed concern over the challenge of inadequacy of gas supply and promised to support the company by approving third party gas injectors and sanctioning new deep-water gas projects. He added that most of the marginal operators had also found gas but part of their challenge was where to send the gas.

Wabote recalled that at the initial phase of the company’s take-off, “The management level had 90 per cent expatriates and 10 per cent Nigerians.” But he expressed joy that the reverse was now the case.

On milestones achieved by the gas company since inception, its General Manager, Production, Nnamdi Anowi, said NLNG had as its core areas of operation liquefaction, transmission, transportation, marketing and sales. Anowi disclosed that over 5,770 LNG cargoes had been delivered as of September 2023, while over 500,000 tons of Liquefied Petroleum Gas (LPG) had been produced and sold to markets overseas and in Nigeria.

Avuru: Nigeria Needs about $7.6bn Investment to Return Oil Production to 2.1mbpd in Two Years

For the umpteenth time, Mr. Austin Avuru called for measures to retool the ailing Nigerian petroleum sector. He said investment worth about $7.6 billion was needed to ramp up the nation’s oil production to its former 2.1 million barrels per day in the next two years.

Avuru, along with his fellow industry players and petroleum explorationists, also highlighted the need for the federal government and the regulators to marshal out strategies and interventions aimed at rescuing the oil and gas industry, which had been on the downward trend for many years.

They spoke on Monday, in Lagos at a pre-conference workshop heralding the 41st Annual International Conference and Exhibition of the Nigerian Association of Petroleum Explorationists (NAPE), scheduled to hold November 12 -16 in Lagos.

The topic of the pre-conference workshop was, “Unlocking Nigeria’s Remaining Energy Potentials to Fuel Economic Growth and Diversification: Opportunities and Challenges.”

The AA Holdings’ chairman, who presented the keynote address at the event, said with the projected oil demand decline after 2035, driven by energy transition, there was urgent need for Nigeria to come up with action plans that would enable it to quickly unlock and utilise its huge hydrocarbon resources still left on the ground.

He warned that if investments into exploration and production were not accelerated immediately, Nigeria and Venezuela might become the only two countries leaving their oil and gas resources untapped in the next 30 years and beyond.

Avuru stated, “At a time, when our industry should be producing 3 -4 million barrels per day, unfortunately, we are producing just about 1.3 million barrels.

“So, we will need about two years to be able to come back to 2.1 million barrels a day. We will need another two years to take production to 3 million barrels a day by 2027.”

He added, “So, to arrest natural decline and add 800,000 barrels per day over two years will require 426 wells plus 320 developed. We will require $7.6 billion in well lost alone and 45 rigs on duty.”

He maintained that in the next 30 years, Nigeria and the rest of the world would witness energy supply and demand reduction, adding that by then, natural gas would support a shift from coal.

In addition, Avuru projected that beyond 2035, there would be a combination of reduction in upstream investments and tightening of non-OPEC production would result in a supply tightening with reducing demand.

He said the government must efficiently manage the divestments by the IOCs as well as the transition of operatorship from the multinationals to Nigerian indigenous companies in order to optimise the resources still left in the ground.

He observed that the IOCs were divesting from Nigeria’s mature assets to other provinces based on strategic business decision and not because they were being forced to leave the country.

Avuru forecasted that with the gale of divestments, TotalEnergies would be the only IOC still operating in Nigeria by December 2035.

The former Chief Executive Officer of Seplat and Platform Petroleum expressed concern over the lack of effective management and regulation of the Nigerian oil and gas industry by the government and its agencies.

He lamented the “operatorship vacuum” in the upstream sector caused by the inability of the ministers, the Nigerian National Petroleum Company Limited (NNPC) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to midwife the takeover and optimisation of assets divested by the IOCs.

In his intervention during a panel session at the workshop, Director, Geo-Concept Technical Limited, Mr. George Osahon, stated that the poor state of the Nigerian oil and gas industry was caused by a plethora of challenges. 

Osahon listed the challenges to include insecurity, particularly oil theft and pipeline vandalism; and evacuation constraints, which had forced producers to resort to barging of crude owing to the unavailability of major crude oil pipelines. He also mentioned the issue of delay in licensing rounds and lack of exploration spend as well as lack of gas infrastructure to facilitate the commercialisation of gas.

To change the ugly narrative, he called for the rejigging of the National Energy Policy in line with current realities. He also suggested that the “moribund 2018 Energy Policy be cleaned out and updated with specific targets and implementation timelines”.

On his part, General Manager, Gas Business, Seplat Energy, Mr. James Makinde, opined that the main problem of Nigerian oil and gas industry was not lack of policy but implementation. Makinde said lack of gas pipeline infrastructure had remained a hindrance in Nigeria’s quest to accelerate gas production for domestic use and export.

He noted that even the current regulated domestic gas pricing regime was not encouraging investment in the gas space.

Expressing worry over the inter-agency rivalries in the sector, Makinde called for the streamlining of the roles of NUPRC and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), saying their frequent quarrels is affecting operators’ operations.

According to Makinde, “Even the presidential letters have not been able to solve the conflict between the regulators. The quarrels still persist and it impacts on our operations.”

Emmanuel Addeh and Peter Uzoho 

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