Kachikwu: FID on NLNG $7bn Train-7 Shielded from Vagaries of 2019 Polls

By Chineme Okafor in Abuja

Plans by shareholders of the Nigeria Liquefied Natural Gas (NLNG) Limited to reach a Final Investment Decision (FID) on the company’s Train-7 project by December 2018, would not be affected by potential vagaries of Nigeria’s 2019 general election, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu has said.

Kachikwu, at the weekend gave the assurance when he visited the Bonny Island base of the NLNG which currently produces 22 metric tonnes per annum (mtpa) of LNG but plans to invest circa $7 billion on the Train-7 project to expand its production capacity to 30mtpa.

He also said that the government may ask the NLNG to help get two delayed LNG projects in the country – the 10mtpa BrassLNG and 20mtpa Olokola LNG – off the ground through either minimal investment or expert advice. This, he noted, was in line with the country’s plan to expand its LNG market shares.

According to the NLNG’s shareholding structure, the Nigerian government through the Nigerian National Petroleum Corporation (NNPC) owned 49 per cent of its shares; Shell Gas B.V. – 25.6 per cent; Total Gaz Electricite Holdings France – 15 per cent; and Eni International – 10.4 per cent. The company also recently signed agreements with a consortia to embark on Front End Engineering Design (FEED) for the Train-7 ahead of the December FID.

Speaking after his tour of the plant, Kachikwu indicated that Nigeria’s 2019 elections would not interfere with the company’s expansion plan, and that whatever happened at the polls, FID on Train-7 as well as its construction would go ahead.

“Nigeria LNG is always being insulated from politics, it doesn’t matter who is in government or what election purposes are on. They’ve always been a well-run company, independent, strong shareholders, strong board, strong management, in many ways I think this island is insulated from the shenanigans of party politics and all that,” said Kachikwu.

He further explained: “What is more important however is that the president and the current government fully support them, they have been a good go-to point for us when there is problem. They’ve managed the resources that they hold for the government very well, they’ve been very accountable, very transparent.

“At a very critical moment of this regime, early 2015 when we needed help, we went there, that seed money was very essential at getting governors out of the difficulties we had, so, I know every government has always supported them but we have I think supported them a lot more and will continue to support them, so it really shouldn’t matter.”

The minister equally said: “I look at Train-7 and that is fantastic but that’s not a good history after nearly 30 years of operation. I think the first meeting I had with the board, I told them Train-7 is no longer going to be an illusion.

“It is still not where we need to be. I do challenge you that you need to look at Train-8 because we need to do catch up. The transition to cleaner energy is going to be faster than we think.”

On plans to ask NLNG to help Brass and Olokola LNG projects, he said: “What I have said to them is obviously, they’ve been fantastic in terms of their comfort zone. You probably could give them 100 per cent in terms of their performance but I’m saying the world is bigger than this island.

“We have opportunities that are stranded everywhere – BrassLNG in terms of shareholding and financing; OKLNG in terms of even taking off the ground. I am saying, as the grandfather of this business – they built six trains, looking at seven, hopefully potentially more – let’s begin to look at where through minimal investments, through structures and designs and reconfiguration and expert advice, you can actually hand-hold some of those trains that are beginning to lag behind so that the whole founding father concept of ‘take this all over the place’ can happen.

“We are going to be reaching out to them, not from an imposition point of view but from a collaborative point of view to see what we can do and learn from what they have done well.”

He eulogised NLNG for reportedly helping to stabilise the financial condition of the government he serves in when it came on board in 2015, saying: “We were looking for how to raise money and I said there is one entity that has done well and can tell us what is in the coffer, I came to you guys to help us release money and your management was gracious to tell us what was in there and we were able to transparently put our hands in there.”

Similarly, the Executive Secretary of the Nigerian Content Management Development Board (NCDMB), Mr. Simbi Wabote, disclosed that his agency had moved to ensure the Train-7 project would be built with consideration to Nigeria’s local content law in the industry.

Wabote said: “We worked with them conscientiously to ensure that the FEED contract was signed within record time and we have a clear service level agreement between ourselves and NLNG to ensure that we fast-track the contracting cycle which is also very important to ensure that we take FID at the end of the year as soon as we finish FEED work.

“We are going to focus more with them to ensure that the letters of the law are properly interpreted in terms of construction phase of the plant as well as its management phase.”