The Managing Director and Chief Executive, Nigeria LNG Limited (NLNG), Tony Attah, has said it is time for Nigeria to use gas as a catalyst for industrial and economic transformation and rise to become a great gas producing country.
Attah made the declaration while welcoming the Honourable Minister of Information and Culture, Alhaji Lai Mohammed, to NLNG’s plant on Bonny Island, Rivers State today. He remarked that Nigeria urgently needs to unleash its vast gas potential which include 187 trillion cubic feet (tcf) of proven reserves, 600 tcf of unproven reserves, opportunity for growth with NLNG Trains 7 and 8 and an increased supply capacity for 1 metric tons per annum (mtpa) of cooking gas to the domestic market.
“To promote gas sector investment as a catalyst for economic growth for Nigerian economy, it is necessary that affirmative actions are taken to create opportunities to attract international investments. Gas will continue to be an enabler of economic and industrial development and there is need to strategically reposition Nigeria’s gas sector for sustainable economic and industrial development.”
“In NLNG’s case, there was the Nigeria LNG Limited (NLNG) Fiscal Incentives, Guarantees and Assurances Act (NLNG Act). The assurances and guarantees in the Act allowed investments to flow into the country. It provided investors the confidence that any agreement entered into would be respected and preserved. To amend the Act will not help Nigeria, NLNG and its hopes for expansion. It will erode investors’ confidence that the Act provided in the first place.
“We need to be creative with incentives that will attract investments and preserve the sanctity of contracts and agreements for all of this to come together in our national interest.”
Citing the Qatari example, he said “Today, oil and gas, and principally LNG is the foundation of Qatar’s economy; and account for more than 70% of total government revenue, and more than 60% of GDP, as well as roughly 85% of export earnings. Qatar has LNG capacity of about 77MTPA, and generates revenue of about $91 billion per year. In Gas-to-Liquid (GTL) production, Qatar is third in the world with production capacity of about 400kbbl equivalent per day and revenue of about $16 billion a year – all from GTL. Gas was the catalyst for transformation of a small emirate to a global economic powerhouse.”
He added that such transformation was only possible through the implementation of deliberate gas development policies. The Qataris according to him have used gas resources to transform the small nation’s entire economic structure. He added: “Natural gas played a vital role in the development of the economic, and industrial revolution of Qatar. The economy was enhanced in 1991 by conclusion of the $1.5-billion Phase I of North Field gas development. By 1996, the Qataris started the export of LNG to Japan.
“NLNG is a success story that we need to sustain. It is the fourth largest LNG plant in the world. It has generated $90 billion in revenues as at 2015, paid $5.7 billion in taxes as well as committed more than $200 million to corporate social responsibility projects in the Niger Delta especially in the areas of capacity building and infrastructure development. We are ready to commit some N60 billion to see the Bonny-Bodo road come into reality and commit N3 billion annually for the next 25 years to transform Bonny into a Dubai of sorts. All these are achieved with a management staff entirely made up of Nigerians and a workforce which is 95% indigenous.
“In addition, NLNG has contributed significantly to the domestic LPG industry, supplying some 40% of cooking gas to Nigerian homes and businesses. This intervention continues as part of strategies and initiatives aimed at deepening the availability and usage of cooking gas in the country.
“But all of these achievements are in jeopardy with the proposed amendment by the House. This is especially pertinent in view of the imminent requirement of over US$1 billion investment every year in the upstream for the next few years in order to guarantee steady gas supply just to ensure that NLNG’s Trains 1 – 6 can be kept full over the contracted life of the plant. If shareholder confidence is negatively impacted, it would mean that those funds will not be forthcoming, and this would clearly constrain even the basic survival of NLNG’s current operations and Nigeria’s opportunity for gas development.
“It also means an immediate loss of foreign investment of US$25 billion in respect of Train 7 investment (USD$15 billion by the upstream and USD$10 billion for construction). Another impact will be the potential loss of about 18,000 jobs required for the construction activities of Train 7,” he said.
Responding, the Minister of Information and Culture, Alhaji Mohammed called NLNG a shining example of what Nigerians are capable of delivering.
He said: “The vision of NLNG started many decades ago and took nearly 30 years to bring to reality. And within 20 years the initial investment of $8.5 billion translated into $90 billion in revenues, transformed the community and produced the highest tax paying company in Nigeria. The challenge now is how to ensure that we do not kill this dream. I do not see any other alternative”
The Minister concluded that he was very proud of NLNG, adding that all stakeholders need to be engaged to keep the NLNG dream alive.
NLNG is owned by four shareholders, namely, the Federal Government of Nigeria, represented by the Nigerian National Petroleum Corporation, NNPC (49%), Shell Gas BV, SGBV, (25.6%), Total LNG Nigeria Limited (15%), and Eni International (N.A,) N. V. S. a. r. l (10.4%).