- Blames situation on oil theft, scarcity of feed gas supply
The Managing Director of the Nigeria Liquefied Natural Gas Limited (NLNG), Philip Mshelbila, yesterday, hinted that the company’s aspiration to expand its gas processing capacity further with the construction of additional Train 8 would no longer be feasible.
Mshelbila made this known when the Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, visited the NLNG plant on Bonny Island, Rivers State.
He lamented for the umpteenth time, that the company’s 22 million tonnes per annum (mtpa) plant comprising Train 1 to 6 was still operating at roughly half of its capacity due to inadequate feedgas supply to the facility.
The mManaging Director attributed the gas supply inadequacy, which he said had persisted for some time, to the rampant oil theft which he said was impacting gas production and supply to the company.
The company had repeatedly expressed its frustration over its inability to operate at full capacity due to the feed gas supply shortages occasioned by the activities of oil thieves and pipeline vandalism that had caused a major drop in crude and gas production.
Most of the gas produced in Nigeria come with crude oil during oil production.
NLNG had raised similar concern in August last year, when it disclosed that oil theft and pipeline vandalism had resulted to the company losing almost $7 billion in revenue from January to August 2022 due to gas supply constraints.
Adeleye Falade, The company’s General Manager in charge of production at the time, who disclosed this at a conference in Lagos, had said the company’s 22mtpa LNG plant’s production was at the time trending at 99.4 per cent year-to-date availability while utilisation hovered around 68 per cent.
Falade explained that the data between the 99.4 per cent availability and the 68 per cent utilisation, which was equivalent to $7 billion revenue, was part of the effect of the critical oil and gas pipelines that were shut down due to insecurity at the facilities.
But in a statement yesterday by NLNG’s Acting Manager, Corporate Communications and Public Affairs, Yemi Adeyemi, Mshelbila explained that, “Today, the biggest challenge we have, one that poses a threat not only to our existing operations but also to our expansion plans, is feed gas supply.
“Trains 1 to 6 currently operate at roughly half their potential capacity, a situation that has persisted for some time. The main issue behind the challenge is crude oil theft which affects associated gas supply. The plant is half-full, not because we don’t have the capacity but because the feed gas is not there.
“We have aspiration for Train 8 but we cannot progress that work because we have no line of sight as to where that gas will come from.
“We believe that the gas can only come from deep water gas but the terms for that must be addressed. At present, the Production Sharing Contracts (PSCs) that govern deep-water exploration do not offer commercially viable terms for producers.”
He said the company’s commitment to harnessing the immense potential of natural gas would not only restore Nigeria’s reputation as a major energy powerhouse but also propel the country towards a cleaner, greener future.
According to him, “With innovation, collaboration by a wide array of stakeholders, including the government, and unwavering determination, we can shape the energy landscape of tomorrow, driving economic prosperity, creating jobs, and mitigating environmental challenges through gas.”
He said Nigeria must be deliberate in its desire to take opportunities offered by the energy transition, the recognition of gas as a transition fuel and the quest for clean energy to increase its gas investment and harvest the gains from gas.
Briefing the Minister on NLNG’s operations and business, Mshelbila stressed the need to overcome the challenges within Nigeria’s energy sector.
He stated that failure to address the root causes of these issues would perpetuate the country’s struggle with energy poverty and result in a significant loss of revenue from the monetisation of valuable resources.
He maintained that a pivotal starting point for remedying these industry challenges lay in a concentrated effort on the gas sector.
“As we embark on the journey to complete Train 7, we are on the precipice of achieving a remarkable milestone – a capacity of 30 Million Tonnes Per Annum (MTPA).
“This accomplishment will not only position us as one of the largest single-site operations globally but potentially among the top three worldwide in terms of such capacity at a single site.
“It is an achievement that elevates Nigeria’s standing, placing us among the top six nations in this crucial industry,” the NLNG boss added.
He, noted, however, that the world was evolving at an unprecedented pace, and that recent events, such as the Russian/Ukraine conflict, have ushered in a wave of new developments in the LNG sector.
Mshelbila said the surge in activity underscored the robust demand for LNG, a demand recognised by nations worldwide as integral to the global energy transition.
“Considering these dynamic changes, our position in the rankings is likely to shift rapidly, as other countries make substantial investments in LNG production. This is why we believe it is important for us to conclude Train 7 and begin to look beyond that for further expansion,” he added.
Responding, Ekpo said the federal government would continue to encourage engagements amongst stakeholders to resolve gas supply and security issues and restore plans to compete with peers in the world.
The minister stated that NLNG stood as a leading light to the Nigeria’s quest to become an energy-efficient country where clean energy, including gas, was utilised.
He stated further that all hands must be on the deck to stop the loss of revenue in the sector and missed opportunities, adding that the federal government was engaging with investors to tap into the huge gas reserves in Nigeria.
Ekpo said: “The development of gas is something we should pursue vigorously. The present administration will do everything possible to address the issues.
“I am glad that the stakeholders in the sector, like NLNG, are not laidback. They are constantly seeking ways out of this issue. NLNG needs all the necessary encourage to expand. It is for the good of this country. We must be quick to make these gains in development for the benefit of our future generations.”