Experts have predicted that Nigeria may lose substantial market opportunities if it further foot-drags from developing the various gas projects that have been abandoned.
Already, it has been estimated that the country is losing about $1.5 billion revenue from that sector.
Two Nigeria Liquefied Natural Gas (LNG) plants located in Brass in Bayelsa and Olokola in Ogun State have been in state of comatose over the last five years.
Stakeholders have therefore warned that Nigeria’s desire to expand its market share in the global gas supply may suffer a serious setback very soon in the event that she is unable to get the two other LNG plants off the ground.
They said that the non-takeoff of the Brass and Olokola LNG projects has cost the country over $1.5 billion.
Over $500 million and $1 billion have been spent on 5.5 million metric ton per annum Olokola LNG and 10 million metric ton per annum Brass LNG respectively, of which government through the NNPC accounted for over $700 million or 48 per cent.
According to Victor Eremosele, a consultant who has just retired from the Nigeria LNG Limited, the market windows available for these projects now may soon disappear because, by 2020, it may be difficult to find a situation where significant funds have been spent by other countries on their gas projects and these countries would now become new sources of supply of gas to the market.
Victor Eromosele who spoke at the ongoing World Petroleum Congress, holding in Moscow, Russia, said another problem that would confront the gas from Nigeria plants if they ever take off would be the increasing drop in the price of gas at the international market.
According to him, the Shale gas from the United States of America and other gas discoveries elsewhere could make the plants find it difficult to make any significant inroad to other markets. He stated that the price of gas at the international market has started dropping and, coupled with major discoveries of gas across Africa and the world, may sooner or later impact negatively on the revenue from Nigeria LNGs because of shrinking market.
“We do have our three LNG plants; what are we doing with them? Nigeria should just get serious and fix those two other LNG projects. I mean, they have three LNG projects: get them started, and get them running and then compete; otherwise, that window will soon disappear because, by 2020, we will find a situation where significant funds have been spent by other countries and those Capex are actually converting to new sources of supply to the market,” he said.
He stated that prices will trend southwards to around $9 because there are about six exporters with licences in the US and it is expected that this would continue going forward. “This simply means that the market will change.”
According to him, the NLNG still survived three years after the focus shifted to Shale gas because it was selling most of our LNG products; instead of the Atlantic Basin in Europe and America, it started selling in Japan.
“This is however at a very high cost,” he said, “because, to get to Japan, it’s three times the distance of getting to Europe. So it’ll cost you more but, at the end of the day, we found the strategy worked.”
[Leadership Newspapers]
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Bayelsa, Gas Project, NLNG, Ogun, Olokola LNG
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