Lagos, Nigeria — Nigeria LNG Limited has signed a Memorandum of Understanding (MOU) with Enron for the sale of liquefied natural gas (LNG), the company announced in a statement released to journalists Wednesday.
The statement said that under the terms, Nigeria LNG will deliver one billion cubic metres per year of LNG to Enron when the 4th and 5th 'trains' commence production in 2005. It explained that the Project Specification Contract for these trains was awarded in March this year, while the Final Investment Decision (FID) is planned for early next year.
A 'train' is a unit of production of LG, and a plant could have many trains, the determinants being the availability both of the market for the product and the natural gas or the feedstock.
NLNG commenced commercial operation in October 1999 with its two-train, 5.9 million tonnes per annum Base Project. A third train of similar design and capacity as the Base Project trains is currently under construction and is scheduled for completion in late 2002.
Output for the base project was pre-sold to buyers in Europe for an average of 22.5 years before it commenced production. And for train 3, which is expected to commence production late next year, all the expected product has been pre-sold.
Nigeria LNG Managing Director, Andrew Jamieson, said the MOU with Enron represents confidence in the capability of Nigeria LNG as a reliable supplier, and that he expects the company to sign several additional MOUs for the remaining volumes, from NLNG Plus, very soon.
Each of trains 4 and 5 will have a capacity of 4 million tonnes per annum of LNG and up to 0.5 million tonnes per annum of liquefied petroleum gas (LPG), according to the statement. The Engineering Procurement and Construction contract is to be awarded in the first quarter of next year.
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The Nigeria LNG plant, located on Bonny Island, Rivers State, has been producing at more than its metal plate capacity. Officials of the company attribute this to high efficiency achieved by the plant, which some of the officials put at about 110 percent.
Consequently, the plant has been able to produce what an official there described as "uncommitted" LNG, as the purchase agreements were based on the established metal plate capacity of the trains. Nigeria LNG has been able to sell the uncommitted gas on the spot market in the United States, where an official said "we've been doing very well." It has so far made some eight spot sales.
On completion of the Nigeria LNG Plus Project, Nigeria LNG will have an overall production capacity of 17 million tonnes per annum of LNG and 2 million tonnes per annum of LPG.
