NLNG Spends $9.3 Billion Six Trains

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Babs Omotowa, MD, NLNG

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THE Nigeria Liquefied Natural Gas, NLNG Limited has spent more than $9.3 billion to develop its six trains, which put it in good stead to deliver about seven percent of the global LNG supply. The money was spent between 1990, when train one, the base project was started and 2007, when train six came into operation.

A breakdown of the figure shows that trains one and two cost $3.6 billion and was financed by NLNG’s shareholders. Train 3, including additional tankage, cost $1.8 billion. The financing was carried out in a manner similar to that of the base project, while much of the cost of the new LNG tankers was borne by third party financiers.

Excluding ship acquisition, the cost of trains four and five (NLNGPlus Project) cost $2.2 billion and were funded with a combination of internally generated revenue and third party loans amounting to $1.06 billion. The final investment decision, FID, for train six was taken in July 2004 at the cost of $1.74 billion. It was principally financed with internally generated funds.

With six trains currently operational, the entire complex is said to be producing 22 million tonnes per annum, MTPA, of LNG and five MTPA of liquefied petroleum gas, LPG, and condensate from 3.5 billion standard cubic feet, SCF, per day of natural gas intake. But final decision is yet to be taken on train seven.

As regards local content, NLNG stated that it has partnered with Hyundai Heavy Industries, HHI, and Samsung Heavy Industries, SHI, to promote the development of a ship repair yard in Badagry, Lagos. According to NLNG, the aim is to bridge the gap created by the absence of an operational dockyard to cater for the repair and maintenance of Very Large Crude Carriers, VLCC, LNG carriers, large and medium size carriers, drilling rigs and support vessels.

In reaction to the shortage of gas for domestic use, NLNG said it has committed to delivering 250,000 metric tonnes of LPG into the Nigerian market annually and has signed sales and purchase agreements, SPAs, with 15 off-takers (all Nigerian companies) for the lifting of LPG for the domestic market. NLNG is owned by four shareholders, namely, the federal government of Nigeria, represented by the Nigerian National Petroleum Corporation, NNPC (49 percent), Shell (25 percent), Total LNG Nigeria Limited (15 percent) and Eni (10 percent).

NERC’s Inclusive Tariff Policy

Amadi
Amadi

THE Nigerian Electricity Regulatory Commission, NERC, decision to initiate and sanction a joint tariff design process by electricity consumers and distribution companies was based on three key reasons. Sam Amadi, chairman, NERC,  said in addition to applying the standard practice of allowing distribution companies come up with data that form its final design and roll out electricity rates to be paid by consumers, it has decided to further deepen the service relationship between electricity consumers and distribution companies by the joint tariff review process.

According to him, the new policy was informed by the need to expand the knowledge of consumers on the operations of the distribution companies to enable them make informed criticism of their actions, get the distribution companies to empathise with consumers in making demands for higher tariffs as well as push the distribution companies to come up with and defend credible data for the tariff review.

NERC recently disclosed that it was ceding parts of its regulatory responsibilities of transparently determining an appropriate tariff to be paid by consumers in Nigeria’s electricity industry to both consumers and distribution companies in the sector. It noted that the decision on joint consultation and determination of electricity rates by consumers and distribution companies was based on the need to foster transparency and inclusiveness in the way electricity rates are decided and paid in the sector.

Amadi stated that both consumers and distribution companies would now have to sit down together to discuss and determine a mutually acceptable cost reflective tariff to be paid by consumers. He explained that NERC, which would take up an independent umpire role in the process, would also review the propositions and indices presented by the distribution companies during and after the consultation with consumers before signing off the mutually agreed tariff to be used by the distribution companies.

He also said the new process would eliminate extant bickering on any tariff rolled out in the sector, adding that consumers now have the opportunity to critically examine propositions made by distribution companies for tariff review. “Let us understand one thing, the new initiative or approach to tariff design in this sector is not totally new. In most jurisdictions in the world, it is the Discos that prepare their bill and even in the NERC here but then they don’t always do a robust wok on the process but based on that we try to help design a tariff that is fair and affordable to all parties involved. What is happening here is that we are saying to the Discos, take charge of your network, look at your system and then come to us and tell us what they think is the cost at which they need to provide efficient electricity service to their consumers,” Amadi said.

— Apr. 27, 2015 @ 01:00 GMT

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