President Buhari’s Gas Revolution: Political Will, Policies, Infrastructure.

On the 4th of October 1976, Colonel Muhammadu Buhari, Nigeria’s Federal Commissioner for Petroleum and Energy, signed, on behalf of the Federal Military Government, an agreement with Shell and BP for the establishment of an export-oriented 800MMscfd Liquefied Natural Gas (LNG) on Bonny Island, at a cost of 1.8 billion Naira.

The Bonny LNG Limited (BLNG) was also incorporated. Unfortunately, that particular project didn’t work out, with the investors pulling out in the early 1980s.

The Buhari-led military administration (1984–85) restarted the bid to make Nigeria an LNG-producing/exporting country, inaugurating, on March 1, 1985, a Nigeria LNG Working Committee, under the Chairmanship of respected boardroom guru, Gamaliel Onosode.

That was the birthing of the hugely successful company that is today known as the Nigeria Liquefied Natural Gas (NLNG) Limited. It would of course take another two decades-plus for the first export of LNG from the plant (October 1999).

Between 1996 and 2007/8, the Company built six “trains” with a total capacity of 22 million metric tonnes of LNG output, making Nigeria one of the ten leading exporters of the product in the world.

And then silence followed. No new “trains”, after 2008, even though there were clear opportunities for expansion.

The primary reason for the silence was ‘politics’ — the powers that be had plans for another LNG plant, in another location (another State), and even though it was not a very realistic plan, all things considered, they did all they could to push it at the expense of the already-existing, already-thriving Bonny NLNG. (The Cable newspaper details the intrigues here)

Enter President Muhammadu Buhari, again. On the 15th of June, 2021, he presided over the formal flagging-off of construction of the NLNG’s 7th Train, with a capacity for 8 million metric tonnes of LNG, translating to a 35 percent increase in capacity.

• July 2018: Search for an EPC contractor for Train 7 begins, with the signing of Front End Engineering Design (FEED) with two consortia, B7 JV Consortium and SCD JV Consortium, in a Dual FEED Process. Guaranty Trust Bank of Nigeria and Sumitomo Mitsui Banking Corp. (SMBC) are appointed as Financial Advisers for the Project.
• March 2019: NLNG and Nigerian Content Development Monitoring Board (NCDMB) sign-off an approved plan for Nigeria Content (NC) for NLNG’s Train 7 Project.
• September 2019: NLNG issues Letter of Intent for the EPC Contracts of the Train 7 Project to SCD JV Consortium, comprising affiliates of Saipem, Chiyoda and Daewoo
• December 27, 2019: NLNG takes the Final Investment Decision (FID) on Train 7, at a ceremony in Abuja, Nigeria
• April 2020: Approval of the Nigerian Content Compliance Certificate (NCCC) and Approved Vendors Lists (AVLs) by the Nigerian Content Development and Monitoring Board (NCDMB).
• May 13, 2020: Nigeria LNG Limited (NLNG) awards the Engineering, Procurement and Construction (EPC) Contracts for the Train 7 Project to SCD JV Consortium, comprising affiliates of Saipem (Italy), Chiyoda (Japan) and Daewoo (South Korea)
• June 15, 2021: President Buhari performs NLNG Train 7 Groundbreaking Ceremony, to formally mark the commencement of construction.
• Train 7 will increase the capacity of NLNG’s current six-Train plant by 35% from the current 22 Million Tonnes Per Annum (mtpa) to 30mtpa. The Project is anticipated to create more than 12,000 new direct jobs (and as many as 40,000 new indirect jobs) during the construction stage, and will attract $12 billion in new investment into Nigeria.

This is simply one manifestation of President Buhari’s commitment to unleashing Nigeria’s full gas potential. The President declared the 2020 as the ‘Year of Gas’ for Nigeria, and on Monday March 29, 2021, launched the Nigerian ‘Decade of Gas.’

Under his watch, as President and Minister of Petroleum Resources, the following milestones in Gas Development, in addition to the NLNG Train 7 kick-off:

POLICIES:

• June 2016: Federal Government endorses World Bank’s ‘Zero Routine Flaring by 2030’ Initiative.
• December 2016: Federal Government launches the National Gas Flare Commercialization Programme (NGFCP) (more info here)
• May 16, 2017: Federal Government of Nigeria ratifies the 2015 Paris Climate Change Agreement and submits country’s first Nationally Determined Contributions (NDCs) to the UN Framework Convention on Climate Change. (Among other things the NDCs include a commitment to ending gas flaring by 2030).
• National Gas Policy, 2017: According to the Federal Government, “The National Gas Policy commits to ending gas flaring, creating an enabling environment for investors, seeking value addition for gas, and improving governance in the sector.”
• July 2018: President Buhari signs the Flare Gas (Prevention of Waste and Pollution) Regulations, 2018, which provides a fiscal and commercial framework for the implementation of the NGFCP.
• December 1, 2020: National Gas Expansion Programme (NGEP), and the Autogas Rollout launched by the President. The NGEP aims to deepen domestic usage of natural gas in its various forms, and make gas the first choice source of cheaper and cleaner energy for Nigerians in their personal and industrial endeavours.
• March 29, 2021: President Buhari launches “The Decade of Gas in Nigeria.”

PROJECTS:

• Completion of the 342KM Escravos — Lagos Pipeline System Phase 2 (ELPS 2), running from Oben node in Delta State to Itoki in Ogun State, and doubling the capacity of the ELPS from 1,100MMscfd to 2,200MMscfd.
• The Completion and Commissioning of the Integrated Gas Handling Facility and LPG Processing and Dispensing Plants — the largest onshore LPG plant in the country — built and operated by the Nigerian Petroleum Development Company (NPDC), an Upstream Subsidiary of NNPC in Oredo, Edo State (commissioned by the President on December 22, 2020)
• The Completion and Commissioning of the Lot 2 of the 130KM Obiafu-Obrikom-Oben (OB3) Gas Pipeline, running from Obiafu/Obrikom in Rivers State, through the Oben Metering station in Edo state, to link to the Oben node on the Escravos Pipeline system (ELPS), in Delta state. The OB3 Pipeline has a capacity to deliver 2,000MMscfd of gas.
• Flag-off of Construction of the 614KM Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline Project, on June 30, 2020.
• Private Sector-led Projects like the Sterling Oil Exploration and Energy Production Co. (SEEPCO) Gas Processing Plant in Kwale, Delta State, a Gas Processing Plant in Kwale, Delta State, with the capacity to process 125MMscfd of Natural Gas. (Commercial production commenced October 2020). The Plant will supply dry gas for a proposed 650MW NNPC/SEEPCO Independent Power Plant in Delta State, as well as boost domestic supply of Liquefied Petroleum Gas (LPG) and general domestic gas.
• Under construction: The fully-funded $700m 300MMscfd ANOH gas plant facility at Asaa, Ohaji/Egbema in Imo state, being developed by ANOH Gas Processing Company (AGPC), an Incorporated Joint Venture owned 50:50 by Seplat Petroleum Development Company and the Nigerian Gas Company (NGC), which is a wholly-owned subsidiary of Nigerian National Petroleum Corporation (NNPC).
• Rungas Prime Industries Limited 400,000 per annum Type 3 LPG Composite Cylinder Manufacturing Plant in Polaku, Bayelsa State, with the support of the Nigerian Content Development and Monitoring Board (NCDMB). Groundbreaking took place on August 13, 2020.
• Under development: A $1.4 Billion Multipurpose Industrial Platform Project by the Nigeria Sovereign Investment Authority (NSIA), in partnership with OCP of Morocco. The project, to be sited in Akwa Ibom, is a backward-integration initiative that will produce 750,000 MT of Ammonia annually, as well as 1 million MT annually of DAP and NPK Fertilizers, for the domestic and export markets. The Project will utilize Nigerian Gas and Moroccan Phosphate.

In 2018, the NNPC identified and signed agreements on seven “Critical Gas Development Projects”, as follows, to deliver about 3.4 billion standard cubic feet of gas per day, to boost domestic gas supply, and support power generation and industrialisation.

• Development of Assa North/Ohaji South field.
• Development of Samabri-Biseni, Akri-Oguta, Ubie-Oshi and Afuo-Ogbainbri unitised gas fields.
• Development of NPDC’s OMLs 26, 30 and 42.
• Development of SPDC JV gas supply to Brass Fertiliser Company.
• Cluster development of OML 13 to support expansion of Seven Energy’s Uquo Gas Plant.
• Cluster development of Okpokunou/Tuomo West (in OMLs 35 and 62).

PRESIDENTIAL QUOTES:

“As Minister of Petroleum Resources, I kicked off our first foray in LNG Business in 1978. At the time it was already apparent that Nigeria was mainly a gas-rich country with a little oil!” — President Muhammadu Buhari, June 15, 2021

“Through the Decade of Gas initiative, which I recently launched, we will transform Nigeria into a major gas and industrialised nation with gas playing the key role as revenue earner, fuel for industries and necessary feed for petrochemicals and fertiliser plants.” — President Muhammadu Buhari, June 15, 2021

‘‘Our major objective for the gas sector is to transform Nigeria into an industrialized nation with gas playing a major role and we demonstrated this through enhanced accelerated gas revolution.” — President Muhammadu Buhari, March 29, 2021

“At the turn of the Year 2020, this Administration made solemn declarations to the Nigerian public over its plans to expand the gas sector footprints by scaling-up the development and utilisation of Nigeria’s abundant Natural Gas Resources to help spur industrialization, provide clean and efficient energy for transportation and household use while increasing our exports into the international market. It is on the backdrop of this commitment that the Year 2020 was dedicated and embodied as Nigeria’s Year of Gas.” — President Muhammadu Buhari, December 22, 2020

“The Oredo Integrated Gas Handling Facility and its associated NGLs depot will be delivering 240,000 metric tons of commercial grade Liquefied Petroleum Gas and Propane. It will also deliver about 205 million standard cubic feet per day of lean gas to the domestic market… Apart from being the largest onshore LPG plant in Nigeria with the potential of supplying about 20% of Nigeria’s LPG demand, the Oredo Integrated Gas Handling Facility was carefully situated at a corridor proximate to over 80% of Nigeria’s LPG demand source.” — President Muhammadu Buhari, December 22, 2020

“The roll-out of the National Gas Expansion Programme, [and] Auto-gas Initiative is coming at the right time, especially in light of global crude oil market fluctuations coupled with the full deregulation of the local PMS market. These developments have made it imperative to focus on gas as an alternative fuel to move Nigeria from the conventional dependence on white products for autos and prime-movers of industrial applications, to cleaner, more available, accessible and affordable energy source.” — President Muhammadu Buhari, December 1, 2020

“It is no longer news that the vast Natural Gas resources, which Nigeria is endowed with has hitherto been used sub-optimally as a result of a dearth of gas processing facilities and infrastructural connectivity for effective and optimal domestic utilization… With a proven reserve of about 203 Trillion Cubic Feet (TCF) and additional upside of 600 TCF, ranking Nigeria as the 9th in the world currently, the need for domestic gas expansion and utilization is apparent.’’ — President Muhammadu Buhari, December 1, 2020

‘‘We promised the Nation that we will expand the critical gas infrastructure in the country to promote the use of gas in the domestic market… These projects are fundamental to our desire to industrialize and energize the entrepreneurial spirit that is ever present in our population.’’ — President Muhammadu Buhari, June 30, 2020

‘‘Gulf countries that have similar levels of gas reserves as Nigeria, have a strategy centered around gas-industrialization as their foundation towards export diversification. This has to be our guiding principle as we seek to attract investment and create opportunities for our people.’’ — President Muhammadu Buhari, June 30, 2020