Recently the NLNG signed a long-term Gas Supply Agreements (GSAs) with six third-party gas suppliers in a strategic move to strengthen feed gas supply to its existing trains on Bonny Island and support the Company’s gas development drive.
This action by NLNG and other stakeholders will lead to bringing some social economic comforts to the country at large and help reduce tensions in the Niger Delta region in Particular.
This act is an unprecedented development which has not been witnessed in recent times. There wer apprehension of where the gas to feed Train will come from when it is completed. This has been a major concern. A major concern not because the feed stock is not available but how to sustain supply without serious disruptions as a result of security breach on the pipelines and community related crisis among other things. These have plagued the operations of oil and gas companies in the Nigeria Delta. However, we must applaud the efforts of the government who has worked tirelessly to ensure the relative that has pervaded the region now. It is hoped that this would be sustained for a long time to come.
To have successfully signed the GSAs, is a “No mean feat.” Given the kind of challenges faced by operators in recent years. Some of these challenges ranges from, kidnapping, bursting both gas and crude oil pipelines and the most damaging of all, stealing of crude oil which has led to serious environment issues in the region where the NLNG operates.
The management of the company must have painstakingly gone through a lot of excruciating process and procedures before coming to the same table with gas suppliers to sign the GSAs.
The Nigerian National Petroleum Company Limited (NNPC Ltd.) and several upstream gas suppliers have signed long-term Gas Supply Agreements (GSAs) with the Nigeria Liquefied Natural Gas Limited (NLNG) for the delivery of 1.29 billion standard cubic feet per day (bscf/d) of Feedgas.
The long-term agreements, with options for extension, were signed with SNEPCO-SUNLINK HI project, TEPNG AMNI JV IMA project, NNPCL-First E&P JV, SNG NGML, OANDO- NNPC E&P, and TEPNG JV Ubeta. The suppliers will deliver an estimated 1,290 million standard cubic feet per day (mmscf/d) or 13.3 bcm/yr of feedgas to NLNG. The volumes will be gradually scaled up over a period of time.
The good thing about the agreements is that it can lead to higher export volumes of liquefied natural gas (LNG), generating significant revenue for Nigeria. This influx of foreign currency can strengthen the country’s economy.
It also signifies confidence in Nigeria’s gas sector, potentially attracting more foreign direct investment. This can lead to the development of infrastructure and technology, further boosting the economy in the following areas:.
Increased Revenue: These agreements can lead to higher export volumes of liquefied natural gas (LNG), generating significant revenue for Nigeria. This influx of foreign currency can strengthen the country’s economy.
Investment Opportunities: The agreements signify confidence in Nigeria’s gas sector, potentially attracting more foreign direct investment. This can lead to the development of infrastructure and technology, further boosting the economy.
Job Creation: As LNG production increases, there will likely be more jobs created in various sectors, including manufacturing, transportation, and services, thereby reducing unemployment rates.
Energy Security: By securing long-term gas supply agreements, Nigeria can enhance its energy security, ensuring a reliable supply of gas for domestic use and production, which can stimulate industrial growth.
Diversification of the Economy: Strengthening the gas sector can help diversify Nigeria’s economy, reducing its dependence on oil revenue and creating a more resilient economic structure.
Boost to Local Industries: Increased gas supply can benefit local industries that rely on gas as a feedstock or energy source, leading to reduced production costs and enhancing competitiveness.
Environmental Benefits: Promoting natural gas as a cleaner energy source compared to other fossil fuels can contribute to better environmental practices and compliance with global standards.
Overall, these agreements can play a significant role in fostering sustainable economic development in Nigeria while positioning the country as a key player in the global energy market
Overall, these agreements can play a significant role in fostering sustainable economic development in Nigeria while positioning the country as a key player in the global energy market.
The new GSAs represent a significant boost to feedgas availability, enhancing NLNG’s capacity to meet its commercial commitments while laying the groundwork for expansion. This development is aligned with the Federal Government’s Decade of Gas initiative, which places natural gas at the centre of Nigeria’s industrialisation and energy transition agenda.
Speaking on the agreements, NLNG’s Managing Director and Chief Executive Officer, Philip Mshelbila, described the milestone as the culmination of sustained efforts by shareholders and stakeholders to address long-standing gas supply constraints. He noted that in recent years, NLNG’s operations had been significantly impacted by pipeline disruptions, including vandalism and sabotage, affecting upstream gas availability.
“NLNG recognises these challenges and the consequent insufficiency of gas supply has caused to its long term buyers, customers, shareholders and more widely to the Nigerian economy. With the new GSAs, NLNG is optimistic of sustainable gas supply for the future and remains grateful for the continuing support of its buyers and other stakeholders, and looks forward to a successful future together.
“We could not have achieved this without the deliberate and concerted efforts of our shareholders and stakeholders in the energy industry in Nigeria. These agreements are a turning point in NLNG’s journey, restoring reliability of supply and ensuring we remain firmly on the path of growth and expansion,” Mshelbila said.
He further explained that the new GSAs mark a historic shift for NLNG, which since inception had relied primarily on legacy shareholder joint venture affiliates for gas supply. He said with the recent divestment of onshore assets by several International Oil Companies (IOCs) to non-shareholder entities, NLNG is now procuring feed gas from diverse third-party suppliers to meet its growing needs for both Liquefied Natural Gas (LNG) and Natural Gas Liquids (NGLs) production.
The landmark GSAs are a game-changer for Nigeria’s gas industry, enhancing local gas production capacity and improving gas supply, which are critical to the country’s energy security, industrialisation aspirations, and economic growth.
