Nigeria LNG Awards Train-7 Feed Contracts
Nigerian NLNG signed front-end engineering design (FEED) contracts July 11 for its planned Train 7 in London with two engineering consortia: KBR with TechnipFMC, and Japan Gas Corp on the one hand, and Italy’s Saipem, Japan’s Chiyoda and South Korea’s Daewoo on the other. Each of the two will produce a Feed, determine a cost estimate, and bid against each other to build the liquefaction train.
The four NLNG shareholders – state Nigerian National Petroleum Corporation (NNPC), Shell, Total and Eni – were present at the signing, which brings to an end feasibility studies for the T7 project.
NLNG CEO Tony Attah had said in Lisbon late last year that the 22mn mt/yr NLNG venture would be expanded by 7mn mt with the addition of a seventh train, to reach 29mn mt/yr; the new train could start up in 2023 as the global LNG glut starts to disappear. Last month Attah said in Washington DC said a T7 final investment decision is scheduled for later this year.
NLNG is seeking $6.5bn financing to build Train 7, as well as a further $5bn for the expanded upstream gas supply. State-owned NNPC noted that the NLNG T7 expansion would be accompanied by a debottlenecking of trains 1-6; it estimated its 49% share of the project cost at $4.3bn.
Original loan repaid
At the same July 11 event, NLNG said it had repaid a $5.45bn loan to shareholders for the construction of Trains 1 to 6. In the 1990s, it sourced a total of $4.043bn from its shareholders to part-fund construction of the six trains. The difference - $1.411bn – represents interest on the loan.
Jointly owned by the NNPC (49%), Shell (25.6%), Total (15%) and Eni (10.4%), NLNG started exports in 1999 with the commissioning of Train 2, ahead of Train 1 which was commissioned in 2000. The venture commissioned Train 6 in 2007, but its plans for T7 have been on hold for the past decade.
NNPC group managing director Maikanti Baru said that NLNG, to date, had generated more than $25bn revenues for the Nigerian government, comprising $17bn dividends and $7.2bn taxes.
But there are big questions – particularly in the run-up to presidential elections in February 2019 – over whether so many ambitious investment decisions can be simultaneously progressed. Earlier this week NNPC selected four technical consultancies to work on delivery of seven gas infrastructure projects that it hopes will enable gas to be used to generate 15 gigawatts of local power generation by 2020.