Philip Mshelbila, the Managing Director of Nigeria Liquefied Natural Gas (NLNG) Limited, has announced that the Train-7 project has achieved a significant milestone, reaching 52% completion. This update was shared during a recent engagement session with Simbi Wabote, the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB).
The Train-7 project, with an estimated cost of $5 billion, has made remarkable progress and is currently at the 52% completion mark. Mshelbila highlighted that the project has positively impacted the Nigerian workforce by employing approximately 8,300 Nigerians with diverse skillsets. He emphasized the importance of nurturing the capacity of the Nigerian workforce and acknowledged NLNG’s vision to become a globally competitive LNG company that contributes to building a better Nigeria.
Challenges in Gas Supply
Despite the notable progress in constructing the Train-7 plant, Dr. Mshelbila expressed concerns about the potential completion of the project without an assured supply of feed gas. He pointed out that essential deepwater gas projects required to provide feed gas for Train-7 and potential future expansions have not been activated by international oil and gas companies (IOCs).
This looming challenge could result in the Train-7 project achieving physical completion but lacking the vital feed gas required for its operation. NLNG currently faces hurdles in obtaining a sufficient supply of gas, leading to underproduction in its six plants, which are operating at less than 50% of their total capacity.
To address these challenges, Dr. Mshelbila outlined several strategies, including collaborating with security agencies to prevent pipeline vandalism and working closely with joint venture partners to increase gas production. Additionally, the Nigeria LNG Board of Directors has approved the procurement of gas from both international and indigenous producers to enhance the performance of Trains 1-6.
NLNG heavily relies on joint venture partners such as Shell Petroleum Development Company (SPDC) Limited, Total Energies, and Nigerian Agip Oil Company (NAOC) for feed gas. However, the gas supply chain is frequently disrupted by pipeline vandalism, facility failures, and reduced production from aging wells.
Gas Supply Challenges Persist
In October 2023, Nigeria’s Minister of State for Petroleum Resources (Gas) visited NLNG at Bonny, where Dr. Mshelbila expressed the company’s most pressing challenge. The issue revolves around feed gas supply, which is impacting both current operations and future expansion plans.
Dr. Mshelbila revealed that Trains 1 to 6 are operating at approximately 50% of their potential capacity due to prolonged challenges in gas supply. This situation is primarily a result of crude oil theft affecting associated gas supply, leading to underutilization of the plants, not because of a lack of capacity but due to insufficient feed gas availability.
Despite NLNG’s aspirations to establish Train 8, the absence of a clear and reliable source of gas remains a significant impediment. Dr. Mshelbila emphasized that the required gas can likely only be sourced from deepwater reserves, but the terms and conditions for obtaining it need to be addressed. He explained that existing Production Sharing Contracts (PSCs) governing deepwater exploration do not offer commercially viable terms for producers, further complicating NLNG’s efforts to secure the necessary gas supply.
