The Nigeria LNG Limited (NLNG) is one of the most important economic projects that the Nigerian government has undertaken in recent years. The Train 7 project which is ongoing at present, involves the construction of a 614km gas pipeline.
The pipeline from Ajaokuta to Kano will run through several communities thereby creating jobs along the way during the construction phase and after. The Train 7 project will provide gas for power and stimulate the creation of new industries in different towns in Abuja, Kaduna, Kogi and Niger. These new industries will lead to the creation of thousands of local jobs, promote local manufacturing and enhance technology transfer. According to the Nigerian National Bureau of Statistics, the employment rate in the country is 23% and underemployment is over 23%. This stride therefore will significantly reduce the unemployment rate in the country and reduce the rate of poverty significantly.
The current production of 7,000megawatts is not commensurate with the electricity demands for domestic and industrial use in the country. On the completion of the pipeline, the gap in demand and supply of electricity is expected to narrow remarkably as 3,600 megawatts will be added to the national grid. Also, 2.2 billion cubic feet of gas will be produced per day. The pipeline will be linked with the Trans-Saharan gas pipeline which will then export the natural gas to Europe. Huge deposits of gas will contribute immensely to economic diversity, industrialization and economic developments.
Liquified Natural Gas (LNG) is a form of natural gas which has been cooled to minus 260 degrees Fahrenheit or minus 160 degrees Centigrade. At this temperature, it can be exported to other countries around the world by special refrigerated transport ships. Natural gas is growing to overtake coal by 2030.
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Although the production of oil and gas dates back to 1958, the country started commercial production of gas in the early 1970s with an ultimate rise above 2.7 bscf/d in 1979. During this period a domestic market was created in the Eastern part of Nigeria close to the gas source. Since 1990 gas production has increased gradually with daily production rising above 8.2 bscf/d in 2015. Gas has been predicted to be the future for the Nigerian economy.
Initially, gas was routinely flared and disposed-off into the atmosphere by operators in the early days of oil production in Nigeria. The practice of faring 100% of gas in Nigeria lasted in Nigeria until the utilization of gas started in 1963. This commenced with the sales of gas by the Shell Petroleum Development Company of Nigeria (SPDC) to industrial users in Aba. In a bid to create value for gas, The government initiated some projects to increase gas utilisation in Nigeria from the mid1960s to the late 1990s.
Some of these projects include: the Port Harcourt refinery in Rivers State; gas supply to thermal power plants in Delta state, Power Holding Company of Nigeria (PHCN) Sapele, the Ajaokuta Steel complex, Delta Steel Aladja, Nigerian Fertilizer Company of Nigeria (NAFCON), the Egbin Thermal Power Station and the Aluminium Smelting Company of Nigeria (ALSCON) in Ikot Abasi.
The Nigerian LNG projects were crucial to increasing the utilization of gas in Nigeria and to the creation of a position in the international market. West African Gas Pipeline Company (WAGPCo), the SPDC Afam Power Plant, the Escravos Gas to Liquid Plant (EGTL)are some of the major sources of gas sources operated by producing companies. These sources are used to process and recover natural gas liquids which are exported to the international market.
Also, Oil and gas producers were encouraged to use Associated Gas (AG) for their operations. Re-injection into the reservoir for conservation and the maintenance reservoir pressure was also encouraged. In 2015 about 4.26 bscf/d of the 4.74 bscf/d AG produced was utilized either by consumption or re-injection back into the reservoir.
For the next 15 years, over 95% of AG was routinely flared in spite of the early source of utilisation and other government initiatives. Also, gas flaring increased drastically in the 1970s as oil production increased. This was triggered by an increase in the crude oil prices internationally. However, in the 1980s as the crude oil production, there was a significant reduction in AG production and gas flaring. Also, the flaring of gas dropped to 70% at the dip of production in 1987.
However, the commencement of production at the Nigeria LNG plant led to a highly significant reduction in gas flaring in Nigeria. Also, from 1999, different gas utilisation schemes and regulatory interventions initiated by the government forced gas flaring down to 11.4%. By 2020, the government’s ultimate goal was to eliminate routine gas flaring with unavoidable flaring of gas limited to the barest minimum of 2% of the total gas production.
In May 2020, during the most unstable period in the oil & gas sector, Nigeria LNG Ltd (NLNG) signed a US$3 billion corporate loan to fund the construction of its Seventh Liquefied Natural Gas (LNG) train known as Train 7. The Train 7 project (Train 7), is expected to increase the output of Nigeria’s LNG by close to a third this was perceived as a strategic imperative for the long-term economic stability of the country.
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NLNG has earned $114 billion as income over the years; it has paid $39bn in taxes and $18bn in dividends to the Nigerian government. It is projected that the Train 7 project will add about 8 million tonnes per year of LNG to NLNG, thereby, taking the total to around 30mn tpy. NLNG has immensely impacted the nation as it has positively complemented crude oil exploration through the monetization of flared gas,
Currently, NLNG operates a liquefaction complex comprising Six Complete Liquefaction Trains with facilities with a capacity of 22 million tons per annum (mtpa) of LNG, and five million tons per annum (mtpa) of liquefied petroleum gas and condensates. In the Atlantic Basin, the NLNG has grown to become a leading LNG producer. This has made Nigeria become one of the largest LNG exporting countries in the world.
By 2024 when Train 7 is commissioned there will be an addition of approximately eight mtpa of LNG and an increase in the overall NLNG’s capacity to 30 mtpa. This will further strengthen Nigeria’s competitiveness in the global LNG market. Also, this project will be pivotal to the energy transition from fossil fuels to green energies in the country.
This is a timely strategic development that will significantly contribute to the diversification of the Nigerian economy that everyone hoped for. Gas is the future of Nigeria and the Train 7 will meet the expectations of all, things being equal. Train 7 will help rejuvenate the economy of Nigeria. Therefore, the government must take control, get organized and seize all opportunities regardless of all oppositions and corruptions to push the country’s economy up as the country tries to perfect its economic flight on the wings of gas.