NLNG Expects to Take FID on 8MTPA Train-7 by December 2018

• Appoints financial adviser, locks down off-takers for new volumes

Chineme Okafor in London

Barring any changes, the Nigeria Liquefied Natural Gas Limited (NLNG) Thursday said it would take the Final Investment Decision (FID) on its new eight million tonnes per annum (MTPA) LNG Train-7 plant by December this year.

It also said the sale and purchase agreements (SPAs) for the new volumes had been locked down with off-takers since 2007, but that its terms would need to be concretised before the FID is achieved.

The Managing Director of NLNG, Mr. Tony Attah, told THISDAY on the sidelines of the company’s meetings with its shareholders and investors in London, that a financial adviser had equally been appointed by the company ahead of the expected FID.

The NLNG on Wednesday had meetings to commemorate its repayment of $5.45 billion taken from its shareholders to build its six existing LNG trains, in addition to signing dual Front End Engineering Design (FEED) contracts with two consortia for the Train-7.

But in an interview with THISDAY, Attah, disclosed the company planned to take an FID on Train-7 by December, having signed its FEED.

He also said the NLNG was banking on its $11 billion balance sheet and reported business credibility to woo investors for its Train-7 plant.

“Let me establish that this is a very historical moment for us, rekindling what is Train-7. We have made efforts to do Train-7 since 2007, essentially, we’ve being at it for almost 10 years, but we believe that this is the moment. As one of my friends will say, the stars are lining up in favour of our company and this project,” said Attah.

He stated: “Essentially we are giving it everything we have. We’ve got the best supports now, my shareholders have approved that we can go for it. We are ready and believe it is time for Train-7.”

Attah also explained that he was not expecting the 2019 general election in Nigeria to derail the plans for Train-7.

According to him, “My company has always been about ambition, even when there was nothing, we had no plant or location, the shareholders believed and invested what was $5.4 billion, which we paid off.

“It is about belief, but I understand in terms of sequencing of projects, you do the front-end engineering design, then you have your EPC tenders on the table and take your Final Investment Decision hoping that your EPC remains competitive. Our ambition remains to try and get FID in December but it will depend on when the field is completed practically.”

Speaking about the financials and market for Train-7, he noted that the NLNG already has existing Gas Sales Agreements (GSAs) to service Train-7, as well as SPAs.

He said: “I have Gas Sales Agreements (GSAs) in place because I am a brownfield and so it is not a critical factor in essence because I can improve on what I have and my gas suppliers are in agreement that we go for this, we are jointly working.

“The gas supplier who will supply me gas upstream are investing as well. They are also needing to invest about $5 billion or so to develop the gas that I need for Train-7 while I invest another $6.5 billion to build the train itself.”

He stated further: “The SPAs have also been signed before, so already I have existing SPAs for Train-7. I’m 22MTPA today and going to 30MTPA, increasing capacity by 35 per cent or more. All of the new capacities have been contracted.

“What is important is that the SPAs have been signed since 2007 and we’ve been rolling them. We need to renew them and in terms of the tenure it is a conversation that has to come.”

Our expectation as the seller is that we are going to ask for a 20-year tenure but we are not unmindful of the changing dynamics in the market, people want it shorter, the word there for us is flexibility and competitiveness.

“What we are really pursuing is not so much the tenure but value, and so we are open to discuss at an appropriate time,” he added.

When asked if he meant the NLNG would renegotiate the SPA terms – supplies, tenures and pricing, he said: “Absolutely, everything will be renegotiated. We have existing agreements with the current off-takers, except for one that is no longer involved but that will easily be re-distributed amongst them depending on their interest, and so that for us is the next phase to begin to test that interests. And, at the point of FID, we now have to concretise on the actual terms.

“Just about three weeks ago, we appointed a financial adviser and we will go to the market. We underpin a lot with our balance sheet. I have an $11 billion balance sheet, that is pretty healthy, but more importantly the result with the credibility of my company based on the loans that we paid out. For 20 years we never missed one payment, we are credible and liquid, and believe it should not be difficult.”

He indicated that NLNG’s host communities were in support of the new project, adding: “We are partners with our community and they are part of this journey. They are excited that Train-7 is coming because they know what it means to them.”