By Chibuzor Alli
NIPCO Gas Ltd is considering an investment of more than $3bn in a Floating Liquefied Natural Gas project that could produce about three million tonnes of LNG annually in Nigeria.
The proposed development, which would mark NIPCO’s entry into the liquefied natural gas business, is being evaluated for locations in the Escravos area of Delta State and the Akwa Ibom region.
Managing Director of NIPCO Gas Ltd, Nagendra Verma, disclosed the plan at a press conference on Thursday, saying the project remained subject to feasibility studies, regulatory approvals and a final investment decision.
“This proposed development is envisaged to comprise an FLNG
facility along with associated marine and export infrastructure with the
potential to serve both the international LNG market and growing domestic LNG
demand in Nigeria. The proposed project is presently envisaged to produce LNG,
approximately 3 million L per annum, 3 million metric tons per annum. The
proposed development is expected to represent a significant investment
currently estimated in excess of $3bn.
“The
final location shall be determined subsequent to the ongoing feasibility study.
We are looking at strategic locations that will facilitate access to upstream
gas resources, LNG processing, marine transportation and both international and
domestic markets,” he said.
Verma said NIPCO had spent the past six to nine months evaluating the proposed project and was now carrying out preliminary technical, commercial and feasibility assessments.
“We are considering various development concepts, technology
solutions, financing structures and commercial options with a view to
establishing a technically robust and commercially sustainable project,” Verma
said.
The proposed facility is expected to combine an FLNG plant with marine and export infrastructure, allowing NIPCO to target both overseas LNG markets and demand within Nigeria.
“The
project is presently envisaged to have an LNG production capacity of
approximately three million tonnes per annum.
“However, this remains subject to the outcome of the ongoing
feasibility and technical studies, project economics, regulatory approvals and
final investment decisions,” he said.
NIPCO assesses gas supply and logistics
Verma said the company was also assessing the shipping and logistics infrastructure needed to support LNG exports and domestic distribution.
The evaluation covers upstream gas supply and reserves, FLNG technology and configuration, production capacity, marine and export infrastructure, domestic LNG opportunities, shipping and logistics, project economics and financing.
NIPCO is also exploring a strategic partnership with the Nigerian National Petroleum Company for the proposed development.
Verma said the company would continue discussions with government authorities, regulators, upstream and midstream companies, technology providers, financial institutions and other stakeholders as the project progresses.
He said NIPCO’s planned entry into LNG formed part of the group’s wider strategy for Nigeria’s gas sector.
“The proposed FLNG initiative forms part of NIPCO Group’s
broader strategy to deepen its participation in Nigeria’s natural gas value
chain and support the country’s transition towards greater utilisation of
cleaner fuels.”
Project builds on NIPCO’s existing energy investments
The proposed FLNG development would add to NIPCO’s existing investments in Nigeria’s oil and gas industry.
The group said it had invested approximately $2bn in the sector, including pipeline infrastructure, compressed natural gas facilities, fuel retail outlets, AGO and PMS infrastructure, LPG and propane facilities, logistics and distribution networks.
The company said local construction could also help reduce some costs associated with importing LNG-related products.
Responding to a question about whether the project could reduce LNG prices, Group Executive Director, Corporate Services, Abdulkadir Aminu, said indigenous construction would reduce exposure to imports and exchange-rate fluctuations.
“If indigenous construction is done, then there is no impact on
the importation or the fluctuation of the dollar exchange rate and no duty and
anything,” Aminu said. “Obviously, when any product is being manufactured
locally, the pricing is expected to be low compared to the imported price or
imported product.”
Aminu said the project was also intended to increase the use of locally produced gas.
“The aim of doing the project is to get relief to the masses. First is the maximum utilisation of the indigenous gas, more and more monetisation, deepening of the gas utilisation, and reach to the masses,” he said.
He said greater local production could influence prices by reducing some of the costs associated with imports.
“If you produce this thing locally, the cost associated with freight from
overseas compared to when it is imported from overseas, the associated cost of
freight, insurance, clearing charges, landing costs, all those things you are
dealing with, it will definitely impact the price of the product in general,”
Aminu concluded.
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