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Power: Domestic obligation stalls FID on gas export

By on February 19, 2013

Focus on meeting domestic gas obligations is one of the reasons the Federal Government is unable to fast track the taking of final investment decisions, FID, on major gas export projects.

For years government has dilly dallied with the FIDs on Train 7 of the Nigeria liquefied natural gas, NLNG; Brass and Olokola LNG projects as well as the Trans Sahara Gas Pipelines.

Investment decisions on these projects have been bugged down by a number of reasons including gas stock for the plants, equity disputes, gas pricing and a host of other factors, leading to some of the partners of some of the projects withdrawing from them at one point or another.

The Group Managing Director, Nigerian National Petroleum Corporation, NNPC, Mr. Andrew Yakubu, told journalists on the sidelines of the annual Nigeria Oil and Gas, NOG International Conference and Exhibitions, on Monday in Abuja that government was more concerned about meeting electricity generation targets.

Yakubu, who also declared the conference open on behalf of the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, said: “… as you are aware, there is a shift or rather special emphasis on domestic gas consumption to support the power agenda of Mr. President, and also the petrochemical initiatives and the gas revolution initiatives of Mr. President.”

He noted that although the FIDs on these projects were still pending, government is still pushing ahead with them particularly the LNG projects, especially as the global market is estimated to grow to about over 400 million tonnes by 2030, while Nigeria’s contributions will be about 40 million tonnes or 10 percent of the global production.

“Capacity is being captured in all efforts towards the export projects; Brass LNG in particular, followed by the train 7 of the NLNG and of course the OKLNG. The Brass LNG and NLNG are supposed to contribute additional 20 million metric tonnes; they are part of the opportunities we are pushing in the industry,” he added.

Feedstock and gas pricing
However, Presidency sources revealed that taking FIDs on the Brass and Ok LNG projects have not been easy, not just on account of the economics and legalities involved, but more of reaching agreements with the gas producers and the suppliers.

 

[Vanguard]