NNPC reiterates commitment to Brass, OK LNG

The Nigerian National Petroleum Corporation (NNPC) has expressed its commitment to carry on with its twin gas projects, Brass LNG and OK LNG.

The Corporation said the two projects were high priority gas ventures which promise to boost revenue to the Federal Government.

Speaking during a visit by the management of the Nigerian Television Authority (NTA), NNPC Group Managing Director, Maikanti Baru, said monetization of natural gas was a cardinal mandate of the corporation.

“We are still committed, as NNPC, to monetizing our natural gas. We have the Nigerian Liquefied Natural Gas (NLNG) which is at the moment monetizing about four billion standard cubic feet of gas on a daily basis (4 billion scf/d). We also have plans for Olokola LNG as well as Brass LNG.

According to a statement signed by Ndu Ughamadu, Group General Manager, Public Affairs, of the corporation the NNPC boss said that there is a little challenge with market windows for these projects which are reviewed on a monthly basis and once the appropriate market window opens up, the corporation will quickly get more shareholders to join us for the projects.

The NNPC helmsman said a meeting of Brass LNG stakeholders has been scheduled for early next year to see the way forward for the project.

He further disclosed that apart from the LNG projects, NNPC was also working on gas monetization through aggressive enhancement of domestic gas supply for power generation and industrial use.

On the alleged scarcity of Aviation Turbine Kerosene (ATK) which is purportedly responsible for the hardship being experienced in the aviation sector, Baru clarified that NNPC had taken steps to ensure adequate supply of the product with the importation of over 45 million litres, adding that the challenge had more to do with the inability of airlines to pay for the product upon the introduction of a cash-and-carry policy by marketers on account of the huge amount they were being owed by the airlines.

The gradual shift away from long-term contracts in the global Liquefied Natural Gas market has been described as a threat to Nigeria’s LNG projects, which have over the years been stalled by a lack of Final Investment Decisions.

The OK LNG project was stalled because all the international oil companies (BG, Shell and Chevron) withdrew from the project, with only the Nigerian National Petroleum Corporation left.
The Brass LNG project, which was designed to produce 10 million metric tonnes per annum, was to be built by the NNPC, Total, ConocoPhillips and Eni Group. But ConocoPhillips withdrew from the project in 2013.

The Minister of State for Petroleum Resources, Ibe Kachikwu, was recently quoted to have said that Total had informed the government that it was pulling out of the project.
Prof. Wumi Iledare,the President, Nigerian Association for Energy Economics, Prof. Wumi Iledare, had said that with the decoupling of natural gas price from oil price, the price that would make the LNG dedicated for export viable had become very high.

He explained, “Also, with competition from other regions for the LNG market, the only alternative is the spot LNG market, which is actually what is going to evolve in the not-too-distant future.

Industry analysts say Nigeria is farther away from the LNG-consuming markets than Mozambique, Tanzania and other emerging LNG producers in the world. So, we must have some incentives to be able to compete with them, and our politics is not in any way helping matters.”

The NLNG, in its 2016 Facts and Figures, reiterated that plans for building the Train 7 that would lift the total production capacity to 30 mmtpa of LNG were currently progressing with some preliminary early site preparation work initiated.“Further work awaits an FID by the shareholders. Sales and purchase agreements have already been executed with five buyers,” the company said.

A recent report released by LNG Industry said even as non-LNG exporting nations led by Mozambique and Tanzania sought to develop and monetise their recent discoveries, key Nigerian projects had not advanced in the last couple of years due to reservations over the country’s long-awaited Petroleum Industry Bill.

It stated, “Even after placing Train 7 volumes in 2014, Nigeria LNG has not yet finalised the date for the final investment decision.

“Led by the shale gas boom in the US and substantial discoveries in Australia and East Africa, we are now entering a period where the market may see many projects compete among each other to secure buyers and reach FID.”

According to the report, the oil price decline is likely to stall the LNG market, with spot LNG prices reducing in line with crude oil prices, and buyers not wanting to sign contracts quickly.
“The large size of East African discoveries enables them to be profitable at much lower prices than West African projects. However, the distance of proposed African LNG terminals from key markets has eroded their competitiveness, especially for the premium Japan-Korea-Taiwan market,” the report added.

On the alleged scarcity of Aviation Turbine Kerosene (ATK) which is purportedly responsible for the hardship being experienced in the aviation sector, Baru clarified that NNPC had taken steps to ensure adequate supply of the product with the importation of over 45 million litres, adding that the challenge had more to do with the inability of airlines to pay for the product upon the introduction of a cash-and-carry policy by marketers on account of the huge amount they were being owed by the airlines.

Olusola Bello