The Nigerian Liquefied Natural Gas (NLNG) Limited has said the anticipated eight million metric tonnes (mmt) Liquefied Natural Gas (LNG) from its proposed Train Seven project was geared towards holding off expected LNG market completion from Australia and East Africa.
It stated that the seventh train with the capacity to yield about $3 billion additional revenue to the federal government will help keep its profitability and continued delivery of value to Nigeria irrespective of expected supply glut in the global LNG market, which will come with completion of ongoing projects in Australia and East Africa.
Managing Director of NLNG, Mr. Babs Omotowa, who made the disclosure in Abuja when the company marked its milestone loading and delivery of 3000 LNG exports cargo, said in consideration of the expected competition, the company has began to make adequate investment decisions that will keep it in the market.
Omotowa noted that the global LNG market was gradually becoming a number game of volumes, especially with the discovery of shale gas phenomenon in the United States, the expected start of mega LNG plants in Australia and East Africa, all of which pose significant competition and threat to the companyâ€™s business.
He said since its formal commencement of operations on October 9, 1999, the company has experienced so much successes as well as challenges.
â€œToday we celebrate the export of the 3000th LNG cargo out of Nigeria. We are indeed proud to be among the leading LNG companies in the world that have achieved this feat. NLNG remains the single biggest private sector investment in Sub-Saharan Africa producing 22mtpa of LNG and 5mtpa of Natural Gas Liquids (NGLs). We have buyers spread across the world.
In a space of 10 year from 1999 to 2008, NLNG Limited was recorded as the fastest growing LNG plant in the world at the time. By 2008, we accounted for 10 per cent of the global LNG business although our share of the global market currently stands at seven per cent due to the entrance of new competitors with mega projects. Today, we are the fourth largest LNG plant in the world,â€ Omotowa said.
He said notwithstanding the historic achievements, the company was faced with external challenges as well as internal challenges of sustained feed gas supply and ageing plants and ships, which it is already developing strategies to overcome.
Omotowa who gave an insight into the impacts of the external threats on the operations of NLNG, noted that LNG price at the Henry Hub in Erath, Louisiana US has fallen from $15/ million metric British Thermal Unit (mmbtu) in 2005 to less than $4.50/mmtu currently.
â€œAlong with Australia and East Africa, these supply potentials if all realised may leave only limited window of opportunity for LNG projects to remain robust. The challenge being that whilst demand may continue to grow, pricing is likely to become depressed due to supply glut.
NLNG can stay profitable and continue to deliver excellent value to the country if we are able to play the number game of volumes in the global market. Part of the next phase of our companyâ€™s strategic response to the growing competition is the addition of a seventh train,â€ Omotowa added.
He said, when achieved, the Train Seven will add some eight million metric tonnes to its current production capacity and increase annual output to 30 million metric tonnes, adding that the increase is potentially capable of monitising our gas and yielding an estimated $3 billion in additional revenue.
On the companyâ€™s supply of domestic LPG, Omotowa said the company currently supplies over 80 per cent of cooking gas in Nigeria. He said the company was determined to support the federal government to get more Nigerians to switch to cooking gas rather than the continued use of firewood and kerosene.