Chika Amanze-Nwachuku
10 October 2008
Lagos — Hopes that the multi-billion dollar Brass Liquefied Natural Gas (LNG) and the Olokola LNG (OKLNG) projects would come on stream latest by 2011 may have been dashed following Federal Government's decision to place priority on gas for domestic power supply.
This is coming as the latest Bernstein's quarterly report on LNG has said more production capacity in Nigeria LNG will not come on stream before 2015, including the Brass LNG, OKLNG and an expansion at the Nigeria Liquefied Natural Gas (NLNG).
THISDAY investigations revealed that the signing of Final Investment Decision (FID) on the 8.5 million metric ton per annum Nigeria Liquefied Natural Gas Limited (NLNG) Train 7, earlier scheduled for 2009, may no longer be feasible.
A highly placed industry source told THISDAY at the weekend that President Umaru Musa Yar'Adua is worried that many manufacturing companies in Nigeria are closing down, while others are relocating to neighbouring countries due to the collapse of Nigeria's power supply.
The President, according to the source, has vowed to place pre-eminence on meeting domestic gas demand to fire the nation's power plants that are lying fallow for years before consideration can be given to exports.
He said efforts by the multinational companies to lobby for more time within which to turn in their detailed action plans have failed, as the President is said to have declared that he will not rescind his decision to suspend all export-oriented gas projects should the oil companies fail to meet the October ending deadline for the submission of detailed action plans for domestic gas supply.
Besides, the source stated that the various export -oriented projects had been threatened since the Federal Government unfolded its planned policy review on gas utilisation which placed priority on meeting domestic gas demand before any consideration can be given to exports.
He said the IOCs, rather than come up with action plans, had adopted a wait-and-see attitude, thinking that the policy would fizzle out with time. He said it was their lack of interest in domestic gas utilisation projects that prompted the issuance of the marching order by the government.
In a bid to end the perennial shortage of gas for domestic power supply, the Federal Government, about a fortnight ago, mandated all major oil companies operating in the country to submit a detailed plan for domestic gas supply before the end of October.
The government had warned that if by the end of this month, there is no evidence of cooperation, it will be left with the option of putting a stop or suspending all the export oriented gas projects.
The government had expressed concern that the international oil companies are only interested in export-oriented gas projects and have not shown interest in domestic gas utilisation projects.
However, a stakeholder in one of the LNG projects insisted that the IOCs have always expressed their readiness to invest in gas projects both for domestic use and export.
He blamed lack of progress on most of the oil and gas projects on government's inability to fund its own part of the project, noting that the suspension of the project will not be the best decision.
Continuing, the stakeholder blamed the immediate past administration for building the gas powered plants, without adequate plans for gas provision. He also attributed the delay in the take off of most of the gas projects on the situation in the Niger Delta region, saying investors are scared of "coming to Nigeria to explore our gas".
He urged the government to address the issue of insecurity in the region, in order that investors will feel secure in coming to the country to explore gas.
Meanwhile, a report from Bernstein Research has revealed that delays in liquefied natural gas (LNG) production projects in the coming years will keep the market tight for the next 15 years, The report also said no more production capacity in Nigeria is coming online before 2015, including Bonny Island, Brass LNG, Olokola LNG and an expansion at Nigeria LNG.
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