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Train 7 FID: FG’s commitment to acceleration of gas revolution—Derefaka

Technical Adviser (TA) to the Minister of State, Petroleum, Mr Justice Derefaka, has described last week’s Final Investment Decision (FID) on Train 7 of the Nigerian LNG as a milestone, reinforcing Federal Government’s commitment to the acceleration of the gas revolution in line with the June 28, 2017 approved National Gas Policy (NGP) which essentially builds on the ministerial mandate, policy goals and initiative.

The TA, who spoke to Business Hilights on telephone interview from abroad over the weekend, said “For us in the Ministry of Petroleum Resources, the NLNG Train 7 FID is a clear demonstration of the leadership of Mr. President even in his capacity as the Minister for Petroleum and the Hon Minister of State, Petroleum Resources ~ H.E. Chief Timipre Sylva.”

Continuing, Derefaka, who doubles as the Program Manager, Nigeria Gas Flare Commercialisation Programme (NGFCP) in the Ministry, recalled that “The NGP clearly articulates the policy goals, strategies, and implementation plan of the Federal Government of Nigeria to reposition Nigeria as an attractive gas based industrialised nation through the prioritization of local gas demand requirements. Also, the NGP supports access to infrastructure, a clearly articulated pricing path and institutional capacity strengthening.”

“As you may recall, the Hon Minister of State for Petroleum Resources has declared year 2020 as the year of gas. So our Gas focus for Nigeria is on track.

“For starters, Train 7 means growth for the Nigerian oil & gas industry. Part of the Project will guarantee gas supply in the upstream sector. This will open up new development opportunities in the industry.

According to him, “As a nation, we have been looking to expand export markets for our more than 200 Tcf of proven gas reserves in a bid to cut reliance on oil revenue already hit by a drop in global prices.

“So for me, taking FID for train 7 will help our aspiration in line with the National Gas Policy for Nigeria to become one of the world’s most important LNG gas hubs and help to leverage our abundant associated gas resources as well as further reducing the gas that would otherwise have been flared.

“We are all elated as this is a good way to end the year because Train 7 is the centerpiece of a growth agenda for the FG.

“In terms of kick off of the project, the project is expected to start up in 2024, it will increase Nigeria’s LNG output capacity by 35% from current levels of 22.5 million mt per year to over 30 million mt per year.

“The expansion project will enable us to produce an additional 7.6 million mt per year of which 4.2 million mt will from one new liquefaction train (Train 7), and 3.4 million mt will come from the debottlenecking of existing trains.

“From an investor point of view, the taking of this FID is an indication that there is renewed hope and confidence of international investors, particularly those NIGERIA has been doing business with over the years. And the ministry is putting up robust investor friendly initiatives to attract more investors into the Nigerian gas sector.

“In terms of revenue drive, the train 7 project is expected to generate $20 billion in net revenue for the government and create 10,000 direct jobs during construction phase and 40,000 indirect jobs.

“In terms of next step for the NLNG, I’d say we have a marching from Mr. President to begin to look at taking concrete steps for train 12 because the window of opportunity is there.

In terms of local content, The Project will also support the development of local engineering and fabrication capacity.

Derefaka averred further that “This expansion will ensure that Nigeria, with its significant gas reserves (202 tcf of proven gas reserves, 9th in the world) remains a top, reliable and preferred supplier of LNG in the emerging energy world,” adding that “In all, don’t forget as we enter into year 2020, the year of gas, for the FG and the Ministry, Gas is the Future. The Future is moving the nation to be a gas based one as gas is Growth.”

Recall that Friday, December 27, 2019, fresh boost emerged for the Nigerian gas sector following the successful Final Investment Decision (FID) for the Train 7 Project of the Nigeria LNG Limited (NLNG) in Abuja.

The construction period after FID will last approximately five years with first LNG rundown expected in 2024.

With the decision taken, analysts are upbeat that the Train 7 will among other things; push up its production by 35% with strategic boost to NLNG global competitiveness in the LNG market.

Managing Director of the company, Mr Tony Attah explained that “This decision allows the expansion to increase the capacity of NLNG’s six-train plant from the extant 22 Million Tonnes Per Annum (MTPA) to 30 MTPA, with the award of contracts for the engineering, procurement and construction activities to follow the closure of bank and Export Credit Agency (ECA) financing, and the finalization of some key supporting commercial agreements expected in early 2020.

“The actualisation of the Train 7 Project comes as NLNG celebrates 30 years of its incorporation and 20 years of safe and reliable operations since exporting its first LNG cargo in 1999.

The NLNG is an incorporated Joint-Venture owned by four Shareholders, namely, the Federal Government of Nigeria, represented by Nigerian National Petroleum Corporation (49%), Shell Gas B.V. (25.6%), Total Gaz Electricite Holdings France (15%), and Eni International N.A. N.V. S.àr.l (10.4%).