This Day (Lagos)

3 July 2013

Nigeria: Gaius-Obaseki - U.S. Firm's Exit Won't Affect Investment Decision On Brass LNG

The sudden exit of the United States multinational energy corporation, ConocoPhillips, from the multibillion dollar Brass Liquefied Natural Gas (LNG) project through an announced sale of its 17 per cent shareholding in the project will not affect the feasibility of achieving early Final Investment Decision (FID) on the project, Chairman of Brass LNG, Dr. Jackson Gaius-Obaseki, has said.

Gaius-Obaseki hinted Tuesday at the ninth Annual General Meeting (AGM) of the company in Abuja, that although, ConocoPhillips' pullout from the project had initially dampened the morale and confidence of other stakeholders, they have regained the courage to push through for an early FID on the project.

He explained that despite the unexpected exit of ConocoPhillips, the three remaining shareholders in the project, the Nigerian National Petroleum Corporation (NNPC) with an equity stake of 49 per cent; Eni with 17 per cent stake and Total also with 17 per cent shareholding, have all galvanised to cushion the shock and would now go ahead to sort out other conditions precedent to an early FID. "In my address to the AGM last year, you may recall that I expressed the view that the final investment decision for the Brass LNG project was possible within year 2013 with the full commitment and unwavering efforts of all the project participants.

"At that point, it was not envisaged that the COP's (ConocoPhillips) exit through the announced sale of their shareholding with its dampening effect on morale and confidence will be protracted. Notwithstanding this, I applaud the management and board for the numerous key accomplishments," he said.

Gaius-Obaseki further explained that: "It has posed challenges no doubt about it and I think that it had a dampening effect, there is no doubt about it because they (ConocoPhillips) were there and they are strong financially, technically and very well recognised in the world because in this business, the market and industry will always ask who is there.

"You will do business with NNPC today because Andy is there, if he was a weaker being or does not have what he has, his financiers will always say well, should we take this risk; COP was very strong and we are using their technology, and then they are also in the gas supply chain, so pulling out certainly have effects but again, one must commend the remaining shareholders because they rallied round and almost made it look like COP's exit was nothing and they are all working hard and of course, the NNPC that must bear the brunt being the largest shareholder."

ConocoPhillips had pulled out of the project and some of its other concerns in Nigeria, citing changes in its global business focus and strategy away from Nigeria.

Gaius-Obaseki however gave details on the possibility of an early FID saying: "The recent challenges have indeed served to highlight the resilience of the Brass LNG project.

"This resilience, which has now become the project's defining feature, must however be enriched through greater cooperation and commitment from shareholders on one hand and government's active collaboration with the project's promoters to remove the remaining challenges to the earliest attainment of FID for the Brass LNG project.

"Let me close by maintaining that FID is possible in the shortest possible time, but, only if the shareholders and government will embark on the necessary engagements to address the remaining obstacles. I remain optimistic that our shareholders and ever-supportive government will rise to this challenge. Engagement and quick decision making are highly recommended."

On his part, the Group Managing Director of NNPC, Mr. Andrew Yakubu, stated that other stakeholders in the project had taken ConocoPhillips' exit in good strides, adding that: "I am strongly optimistic, COP has indicated its intention to divest its equity and is in the process of exit but one thing that has encouraged us is the commitment of its management to ensure that all the support we require in terms of technical support and its participation up to when suitable replacement is found will be maintained. It has kept faith with that.

"Other shareholders have also worked round the clock to ensure that the impact that it will bring to the table is greatly maximised."

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