Nigeria looks to Mini-LNG for future gas supplies

Last week, the joint venture of Nigerian National Petroleum Corporation (NNPC) and Total Exploration and Production Nigeria Limited (TEPNG), signed an agreement with the Gas Aggregation Company of Nigeria (GACN) and Greenville Oil and Gas for the construction of Nigerian’s first mini-LNG project.

According, Eddy Van Den Broeke, Chairman of Greenville, the mini LNG plant would be developed in phases, with the first phase costing $500 million of equity investment, while the second phase would take another $350 million.

Although natural gas is the cleanest fossil fuel and also a highly efficient form of energy as it has fewer impurities, less chemically complex, and its combustion generally results in less pollution, one of the major constraints of utilizing natural gas as a fuel is its efficient transportation from supply to demand centers.

There is a distinct mismatch in Nigeria’s natural gas resource and the infrastructure to take to the users. Transporting natural gas in liquefied form is often cheaper and most cost effective than constructing pipelines.

LNG is, therefore, becoming more relevant in the supply and demand of natural gas at a global level. At the end of 2015, 34 countries imported purchased LNG, compared to 15 countries in 2005. The demand for LNG increased to 2.5 percent in 2015 compared to 2014, even with the reduced demand in the global economy.

Although large scale LNG terminals have been preferably constructed across the world till date, the emergence of small demand centers for natural gas within small geographies is gradually shifting the focus towards miniaturizing LNG infrastructure.

But bringing Nigeria’s first mini-LNG project to country is not without challenges.

“The big challenge today is that no bank is available to finance this investment because of the temporary problems that Nigeria is going through”, said Broeke.

But according to the minister of state for petroleum resources, the government looks prepared to deal with the challenges.

“Our first step was to set up the Nigerian Gas Management Company and Nigerian Gas Pipeline Transportation Company. I am happy that a few months after we launched the gas policy we are seeing this happen. We want to ensure that the payment issues are dealt with and made on time so there is a good financing for the project”, said Ibe Kachikwu, minister of state for Petroleum Resources.

FRANK UZUEGBUNAM