NNPC in Talks with Investors for Revival of $30bn Brass, Olokola LNG Projects

*NLNG advocates increased investment in energy infrastructure to drive transitionPeter Uzoho

The Nigerian National Petroleum Company Limited (NNPC) has resumed discussions with investors towards bringing back two long-abandoned Liquefied Natural Gas (LNG) projects -Brass and Olokola LNG projects with total cost of $29.8 billion.
Chief Financial Officer (CFO) of NNPC, Mr. Umar Ajiya, disclosed this at the ongoing 2024 Gas Technology Conference and Exhibition (Gastech) in Houston, United States.
The Olokola gas project sited in Ogun State, valued at $9.8 billion, and the Brass LNG plant in Bayelsa State, estimated at $20 billion were positioned among the largest gas infrastructure investments in Nigeria.
According to the NNPC, both projects, which were anticipated to boost Nigeria’s gas capacity by over 22 million tonnes per annum, have faced decades of delays due to “unfavourable market dynamics and slow decision-making by the political class in the past.”
“In the past, gas prices went down, the economics of the projects meant a high Capital Expenditure (CAPEX), and this was a dis-incentive for investors and partners. Also, there was slow decision-making by the political class,” Ajiya stated.
In retrospect, the Brass and Olokola LNG projects were initiated in 2003 and 2005, respectively, by the administration of former President Olusegun Obasanjo to help the country monetise part of its vast natural gas reserves and meet the growing global demand for clean energy.
The Brass LNG was incorporated in 2003 with shareholders that included the then Nigerian National Petroleum Corporation (now NNPC Limited with 49 per cent equity stake, Eni International (17 per), ConocoPhillips) (17 per cent) and then Total (17 per cent).
The company was formed to construct and operate an LNG plant to be sited on Brass Island, in Bayelsa State. The Front End Engineering Design (FEED) was for two LNG trains of five million metric tons per annum 5mtpa) each and the facility was targeted to be in operation by 2011.
But the withdrawal of the international oil companied (IOCs) from the project, beginning with Conoco Phillips and later, others, led to the abandoning of the Brass LNG project.
On the other hand, the $9.8 billion Olokola LNG was expected to have a total capacity of 12.6 mtpa, with start-up originally scheduled for 2011.
Its shareholders included NNPC, 49.5 per cent, Shell and Chevron each had 18.5 per cent and the UK’s BG Group, which Shell later bought in 2016 had 13.5 per cent.
However, in 2009, BG Group also pulled out of the project, and in August 2013, Shell and Chevron followed suit, leaving the NNPC as the sole investor.
The IOCs had attributed their withdrawal from the two projects to perceived Nigeria’s unfavourable business climate and sundry conditions. While describing NNPC as a commercially driven company which recognises timely project development and execution, the company’s CFO said there are abundant gas resources in many parts of the world and therefore, the earlier Nigeria makes smart decisions to bring partners to the table, the better.

In addition, Ajiya commended President Bola Tinubu for his support in driving new projects in the Industry through the Presidential Executive Orders on Oil & Gas Reforms.

“We are also happy to have the Petroleum Industry Act, 2021 (PIA) which has provided fiscal incentives for investors and is creating the enabling environment that has rekindled hope in the energy sector.”

Meanwhile, the Managing Director and Chief Executive officer of the Nigeria LNG Limited, Dr. Philip Mshelbila, who also spoke at the Gastech in Houston, said Nigeria and other developing nations will need huge investment in infrastructural development to drive their energy transition in an efficient and equitable way.

He spoke during a global leadership panel which centred on ‘Energy Inclusion: Widening Access to Natural Gas and LNG to Support the Transition to Lower Carbon Energy System in Emerging Economics’.

Giving insights into the understanding of the opportunities and challenges associated with the widening access to cleaner energy in high growth markets, Mshelbila stated that the dearth of quality infrastructure like insufficient pipelines, storage and regasification facilities, high costs of importing LNG, as well as energy poverty were key issues that must be addressed.

He noted that by addressing these challenges through leveraging on solutions, emerging economies can widen access to natural gas and LNG, supporting a lower-carbon energy transition and energy inclusion.

He said global energy policymakers must create energy equity and inclusion to ensure that average African women’s daily energy needs were met.

According to him, the Nigerian government was making efforts to meet up with the energy needs of its growing population, using natural gas as its transition fuel.

The managing director stressed that in 2020, the government launched the Decade of Gas, which NLNG is solidly backing and playing a huge role in its implementation.