Geopolitics favour Nigeria’s $9bn target from LNG Train 7

By Ben Eguzozie.

Geopolitics, especially the dynamics that have so far played out in the war between Russia and Ukraine, are lining the path finely for Nigeria to hit its earning target of as much as $9 billion annually from its LNG Train 7 when the $7 billion gas liquefaction plant goes on stream.

Hard data from the International Energy Agency and the OPEC [Organisation of Petroleum Exporting Countries], supplied by IHRDC, also confirm the figure but it is developments in Europe and the raft of actions so far that clearly point to this happening. The Nigeria LNG Train 7 project will increase Nigeria’s production capacity by 35 percent from the current 22 million tonnes per annum (mtpa) to 30 mtpa.

Nigeria is a key LNG supplier to Europe. In 2021, exports amounted to 12.63 billion cubic metres (bcm), according to data from S&P Global Platts Analytics. The biggest buyers were Spain with 49 cargoes supplied or 4.3 bcm of gas equivalent, followed by France with 38 cargoes. Others are Portugal with 34 cargoes, and Turkey 15 cargoes, the data showed.

Earlier in February this year, Nigeria and the EU agreed to look at “all options” for increasing the supply of Nigerian LNG to Europe, as Brussels continued its push to engage with its gas supply partners amid the impasse between Russia and the West over the former’s aggression against Ukraine.

Concern over Russian gas supply to Europe has seen the European Commission make significant diplomatic efforts to seek additional gas deliveries from alternative suppliers – Africa and Asia.

According to EC executive vice president Margrethe Vestager, while on a visit to Nigeria in February, LNG supplies were high on the visit’s agenda.

“The importance of the energy relationship between Nigeria and the EU featured, while consideration of all options for increased supply of LNG from Nigeria to the EU was agreed to, following a request from the EU,” said the office of the former vice president Yemi Osinbajo then.

In May 2020, Nigeria LNG Limited (NLNG) awarded the Engineering, Procurement and Construction (EPC) contracts for its Train 7 project to SCD JV Consortium, comprising affiliates of Saipem, Chiyoda and Daewoo.
Energy sector analysts adduce that the project will create some 12,000 direct jobs at full capacity. It is expected to come on stream by 2024. Nigeria’s LNG has been a success story since incorporation in 1989, delivering its 1st LNG cargo in October 1999, and completing a 6th Train in 2008.

Despite the encouraging performance, a 12-year hiatus marked the country’s LNG story, as it was only coming up with a new train, with an FID taken by 2021.

Claudio Steuer, country manager of IHRDC and director of SyEnergy, quoting data from OPEC, IEA and the World Bank, said Nigeria was currently earning $6.5 billion from LNG. Steuer said the country made impressive performance in gas flare-down in a decade. Using the LNG scheme, Nigeria effectively converted a wasted resource into $130 billion in 20 years —2000 to 2020 — reducing 71% of flared gas to 7.2 billion cubic feet (bcm) from 25 bcm of gas in 2000.

The Nigeria LNG Train 7 project will primarily add a seventh LNG processing unit with a production capacity of 4.2 mtpa and supporting infrastructure including an 84,200m³ storage tank, a 36,000m³ condensate tank, and three gas turbine generators at the terminal.

The project, whose cost is put at $7 billion, will also include debottlenecking of the existing six trains that will increase the processing capacity by 3.4 mtpa, and the construction of wells and pipelines to supply additional feed gas to the LNG facility. Nigeria’s six-train LNG export facility has a capacity of 22.5 million metric tonnes per year (31 bcm per year), but it is being expanded to 30 million metric tonnes per year with the addition of the seventh train.