Decade of Gas: FG to Spend $2bn Investment Yearly on Infrastructure Devt, Says NLNG

•Company to prioritise carbon footprint reduction in Train 8 devt 

•NNPC intensifies efforts to block $1.283bn Seplat-Mobil deal, gets court injunction 

•Indigenous energy firm insists agreement still valid

Emmanuel Addeh in Abuja and Peter Uzoho in Lagos with agency report

The Nigeria Liquefied Natural Gas (NLNG) Limited has said the federal government would need to make capital investments worth $2 billion every year with counterpart funding from the private sector to enable the delivery of specified infrastructure projects listed on the Decade of Gas policy of the government.

This emerged just as there appeared to be no backing down on efforts by the Nigerian National Petroleum Company Limited (NNPC) to halt the completion of the $1.283 billion sales and purchase deal between SeplatEnergies Plc and Mobil Producing Nigeria Unlimited (MPNU).

For the NLNG, with the company’s $10 billion Train 7 project currently under construction, it has set its sight on the Train 8, as it has revealed plan to deploy latest technology on the project to achieve not only expansion, both to also reduce its carbon footprint.

The duo of the Managing Director of NLNG, Dr Philip Mshelbila and the company’s General Manager, Production, Mr. Leye Falade, made the disclosures during separate panel sessions at the just concluded Nigerian Oil and Gas Conference and Exhibition (NOG) 2022 in Abuja.

The theme of the conference was: “Funding the Nigerian Energy Mix for Sustainable Economic Development.”

The federal government had declared January 2021 to December 2030 as Nigeria’s Decade of Gas, a period the government aspires to industrialise the country using gas as an enabler.

Speaking at a panel with the topic: “Harnessing the Opportunities in the Nigerian Gas Sector”, Mshelbila, said the $2 billion investment was necessary as constraints such as lack of financing, absence of infrastructure and lack of interconnectivity of infrastructure were factors hampering Nigeria’s competitiveness in the global gas market.

He said such deficits had resulted to the collapse of the value chain between gas and power, which had been broken for decades and had not been fixed.

He added that in the Decade of Gas work plan, about 10 projects had been identified to address the supply side of the gas and power challenge, pointing out that solving the problem would need a collaborative and comprehensive solution involving all stakeholders in the oil and gas sector.

Mshelbila explained, “If you take the infrastructure side, specific pipelines, interconnections and so on have been identified -the Network Code and all of that, and what needs to be done to ensure that those things happen.

“There is an investment that is going to be needed by government, over one to $2 billion every year with counterpart party private sector investment that is also going to be needed every year in order to ensure that that gets delivered.”

Describing the Decade of Gas Work plan as an excellent piece of work, Mshelbila observed that it had looked at the demand side of natural gas in Nigeria both domestic and export, the supply side, the infrastructure side, the commercial or economic framework needed to address all the problems and had equally outlined very specific things needed to be done to address them.

On the demand side, the NLNG chief executive said the formulators of the work plan had identified that the potential growth in gas demand could go up to about 22.5 billion cubic feet (bcf) by 2030, and that 60 per cent of that could be domestic gas whereas 70 per cent of the country’s gas, as of today, was exported because the domestic value chain was not working.

He further said, “And then, there are solutions around how to resolve the power challenge that we have. But very specific around the supply side is, 10 projects have been identified -onshore and shallow water, and if this 10 projects are delivered, they will actually contribute 40 per cent of the incremental volumes that we need.

“Each of these projects are known, each of them is going to require some special dispensation, whether it is around fiscals, or the framework to enable the delivery of those projects.

“All of that is understood at high level. And what the Decade of Gas says is: the operator needs to sit with all the relevant parties and this is with the ministry, with the Nigerian Content Development and Monitoring Board (NCDMB), everybody, and say, what is it going to take to ensure that this project gets delivered in the interest of Nigeria? So, that also has been outlined.

“On the commercial side, I’ve talked about pricing and the transition all the way to a deregulated market, which has to be a transition because you have to go slowly on that. But you also look out for vulnerable sectors of the community that are going to need some sort of concessions.

“So, there is a plan that we have. What we must not do as a nation is to allow this plan sit on the shelf. So, that has been concluded. We funded the Phase one and Phase two of that work. It’s available. What is needed now is for us as stakeholders to come together and make this happen.”

In his intervention in another panel, which focused on “Developing A Roadmap for Nigeria’s Energy Mix and Decabonisation,” Falade said NLNG Train 8, which is now being discussed, would be built with a radical technology that would enable it to achieve both capacity increase and reduction of its carbon footprint.

The Train 7 project seeks to increase NLNG’s liquefied gas supply capacity by 35 per cent to 30 million tonnes per annum (mtpa) from the existing 22mpta.

The project is an audacious move by the company and its shareholders, which comprise the Nigerian National Petroleum Company (NNPC) Limited, Shell, TotalEnergies, and Eni and it was intended to enable more LNG and Liquefied Petroleum Gas (LPG) delivery to both the export and domestic market.

Falade noted that Train 7 was no longer ambitious for NLNG as the company was now focused on how to bring Train 8 on the table and had started doing the scouting studies for it.

He said, “The news about Train 7 is something that everybody knows about. So, we have started doing scouting studies about train 8 as a company. We started looking at what will it take for us to go beyond train seven? If you were here yesterday (last Wednesday) and you listened to Philip Mshelbila, the CEO, it’s just obvious that Train 7 is no longer ambitious for us.

“So we’re looking at Train 8, but we’re looking at it not from a capacity increase point of view. We’re looking at it from one that enables us to reduce our overall carbon footprint. So the technology design that we’re looking at for Train 8 is the one that lowers our overall greenhouse emission intensity at site. That’s the technology that we’re bringing into it.

“The design is going to be completely different. So while we work on decarbonising the existing assets, we’re very conscious that that in itself is not going to take us to our ambition of net-zero emission. We need to do something radical, something big and that’s where technology comes in.”

He added that technology would continue to play a dominant role as the world moves to achieve net-zero carbon footprint, insisting that technology remains relevant both in existing assets or new gas assets.

 NNPC Intensifies Efforts to Block $1.283bn Seplat-Mobil Deal, Gets Court Injunction

Meanwhile, there seems to be no backing down on efforts by the NNPC to halt the completion of the $1.283 billion sales and purchase deal between SeplatEnergies Plc and MPNU.

THISDAY learnt yesterday that the national oil company has won a court decision temporarily blocking the parties from continuing with the transaction until all the contending issues are resolved.

The Seplat transaction involves the acquisition of the entire offshore shallow water business of ExxonMobil in Nigeria and was expected to deliver 186 per cent increase in production from 51,000 bpd to 146,000 bpd.

The assets include the Qua Iboe Terminal, one of Nigeria’s largest export facilities as well as a 51 per cent interest in Bonny River Terminal and Natural Gas Liquids Recovery Plants at EAP and Oso.

But the deal ran into troubled waters when the federal government turned down the application for ministerial consent necessary to seal the agreement, citing overriding national interest as one of the reasons for rejecting it.

A leaked statement from Seplat and separate court records indicated that a judge in the capital, Abuja, granted NNPC an, “order of interim injunction” on July 6 barring Exxon “from completing any divestment” in the unit.

It showed that the state-run company sued Mobil Producing Nigeria Unlimited on July 5, asking the court to either to order that a dispute had occurred between the parties over preemption rights, or to order them to take the matter to arbitration.

But Seplat, which is not party to the lawsuit, said its deal with Exxon was “still valid” and the company “remains confident that the matter would be brought to a proper conclusion in accordance with the law,” Bloomberg stated.

The contentious assets the court is interested in include  Oil Mining Lease 68, oil 69, 70 and and Oil Prospecting License 94.

The statement added that the court barred MPNU and Mobil Development Nigeria Plc from disposing of their shares in the joint operating agreement (JOA) between them and the NNPC.

“Seplat Energy PLC recently became aware that, on 5 July 2022, the Nigerian National Petroleum Company Limited (NNPC) commenced an action at the State High Court of the Federal Capital Territory in Abuja, Nigeria (State High Court) in relation to the acquisition of the entire shares of Mobil Producing Nigeria Unlimited (MPNU).

“MPNU, its shareholders (Mobil Development Nigeria, Inc. and Mobil Exploration Nigeria, Inc.), and the Nigerian Upstream Petroleum Regulatory Commission are named as defendants in the suit.

“NNPC has requested the State High Court to declare that a dispute has occurred between itself and MPNU in relation to the interpretation of pre-emption rights under their Joint Operating Agreement (“JOA”) and order NNPC and MPNU to arbitration as required by the JOA.

“On 6 July 2022, the State High Court made an ex parte order of interim injunction restraining the Defendants from completing any divestment in MPNU, including the Share Sale and Purchase Agreement signed with Seplat Energy Offshore Limited (the SPA),” the statement said.

The July 6 order restrains ExxonMobil from selling, trading, allocating transferring, or disposing of their shares in their interests covered by or connected to the JOA pending the determination of the claimant/applicant’s motion.

Marked FCT/HC/BW/CV/173/22 m/203/2022, it was filed on July 5 at the high court of the Federal Capital Territory, in the Abuja division presided over by Justice B. Belgore.

Last week, the Chief Executive of the NNPC, Mallam Mele Kyari, pointedly told heads of private oil companies that like them, the national oil company would henceforth go for the best and juiciest assets in the industry as it completes its transitioning to a fully commercial entity.

“We will be the biggest oil and gas company and therefore there will be no distinction between the NNPC and the rest of the partners (private oil companies) that we have in this business.

“And as you are also acquiring assets, and without mincing words, I am being very frontal, we will acquire the best of assets that is possible in order to build our assets base and also those that we can’t manage for our scale, we will give it to you,” Kyari stated pointedly.