NLNG capital investment hits $881m, targets new customers

The Nigeria Liquefied Natural Gas (NLNG) capital investment appreciated slightly from $864.76 million 1.98 per cent to $881.84 million in 2016. The NLNG, in its unaudited financial statement for the year ended, December 31, 2016, also reported significant decline in its earnings for 2016, as its revenue dipped by 30.98 per cent from $6.84 billion recorded in 2015 to $4.72 billion in 2016.

The drop in revenue negatively affected its dividends payout, as it paid $737.086 million in dividends to its shareholders which include the Nigerian National Petroleum Corporation (NNPC), Shell, Total and Eni, in 2016.

The amount paid as dividends in 2016 represented a 65.89 per cent decline when compared to total dividends of $2.161 billion paid to shareholders in 2015.

In addition, the report pointed out that $717.72 million was expended by the NLNG to purchase gas from the NNPC in 2016, compared to $1.18 billion in the previous year, while $593.16 million worth of gas was purchased by the NLNG from Shell, Total, Agip and Conoco Philip in 2016, compared to $961.97 million in 2015.

The NLNG, according to the report, also paid local contractors $565.64 million for goods and services, dropping by 7.4 per cent from $610.82 million paid out to local contractors in 2015.

To this end, the report stated that the NLNG had from 1999 to December 31, 2016, recorded total revenue of $95.09 billion; total capital investment of $16.57 billion; total dividends paid to the NNPC stood at $15.7 billion; while Shell, Total and Eni received $16.45 billion as total dividends in the 18-year period.

Moreso, NLNG’s total gas purchases from the NNPC from 1999 to 2016 stood at $12.588 billion; gas purchases from Shell, Total, Agip and Conoco Philip stood at $10.29 billion over the same period; while total payments to local contractors for goods and services from 1999 to 2016 stood at $5.66 billion.

Meanwhile, NLNG has commenced talks with potential buyers of Liquefied Natural Gas (LNG) to replace some of the existing customers whose contracts will expire by 2022.

The contracts that will expire by 2022 take gas supplies from Trains 1, 2 and 3, which collectively produce nine million tonnes of LNG a year.

The Bonny Island plant of NLNG has six trains – 1, 2,3,4,5 and 6 – producing a total of 22 million tonnes per year.

Reuters quoted a senior official of the company as saying that initial responses from buyers have been positive.

“Trains 1-3 are coming back to the market as they are out of contract by 2022. We started to remarket today. There are some who are guaranteed to buy,” he told Reuters.

Trains are units that freeze natural gas into liquid form for export on ships.

Trains 1 and 2, which are referred to as its base projects were financed by its shareholders with $3.6 billion, while Train 3 referred to as expansion project was financed with $1.8 billion.

The company has a six-train complex of 22 metric tonnes per annum (mtpa) LNG nameplate production capacity, and 5mtpa Natural Gas Liquids (NGLs) production capacity, and has delivered over 3,000 cargoes of LNG to customers.

However, the company stated that through its initiative to empower local contractors via the Finima Legacy Project, five host community-based contractors had made capital investments in their companies thereby expanding their operating capacity, while it had also strategic partnerships between the more established Nigerian vendors and the community vendors.

The NLNG further disclosed that about 54 vendors had been trained at the Bonny Vocational Centre to improve their skills in business development and project management, while its deliberate strategies implemented to increase spend in some communities had led to a significant increase in year-on-year spend with direct spend increasing by over 100 percent between 2011 and 2013 and even further in 2014.

“Doing business with Nigeria LNG has engendered improvement in some of our vendors’ business processes, and led them to upgrade their facilities and capacity to meet very stringent requirements.

“In the past for instance, NLNG worked with DormanLong Nigeria Ltd and Nigerdock Nigeria Plc to enhance their galvanization capability with Nexans Kabelmetal to increase manufacturing capacity and with Nigerian Foundries to improve their processes for the manufacture of trench gratings and manhole covers,” it stated.