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HomeBusinessNLNG operates at 62.5% capacity, posting 1.3 bcf gas supply deficit

NLNG operates at 62.5% capacity, posting 1.3 bcf gas supply deficit

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The Nigerian Liquefied Natural Gas Limited (NLNG) has a 37.5 percent year-to-date gas delivery gap, translating to a 1.3 billion cubic feet of gas (bcf) deficit, which has a negative impact on the company’s export and domestic gas delivery obligations, as well as revenues.

The NLNG’s Deputy Managing Director, Olalekan Ogunleye revealed this during a panel session at the recently concluded Practical Nigerian Content Forum (PNC) in Uyo, Akwa Ibom State, where he also lamented that Nigeria missed a lot of opportunities across the upstream, midstream, and downstream gas value chains.

Ogunleye said the NLNG is currently only able to deliver 62.5 percent of the 3.5bcf gas requirement through its six-trained 22 million tons per annum (mtpa) processing plant in Bonny Island, Rivers State.

He said in the last two decades, there had been priority attention on gas and gas matters, starting with the Gas Master Plan and the current Decade of Gas agenda, noting that there was virtual unanimity amongst all stakeholders on gas development and the potential for gas to unlock economic development.

He said it was also clear that a lot of progress had been made around enabling policies in the oil and gas industry, particularly with the singing into law the Petroleum Industry Act (PIA).

Noting that the industry still has security challenges, Ogunleye added that there was significant cooperation by all actors to address the security challenges.

While observing that the country and the oil and gas industry were not where they should be, the NLNG official stressed the need for all stakeholders to differentiate between efforts and outcome -tracking effort and linking the same with outcome. He stressed that participants must step up actions around that.

In terms of security, Ogunleye stated that industry stakeholders should begin focusing on outcomes, noting that the Nigerian National Petroleum Company Limited (NNPC) and the federal government were working hard to address the issue.

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“We need to double down as of what the security agencies are doing. We need to leverage on intelligence gathering, we need to leverage on technology and it can be done. And more importantly, we need to understand that security is the responsibility of everyone and that it’s something that everybody is losing to.

“The security has to be effectively addressed and we must be tracking not just the efforts but their outcomes because you can track gas production, you can track oil production. And we need our communities to step up their partnership by providing information, by supporting the security agencies,” he said.

He emphasized the importance of incentivizing investments in the country, citing the fact that gas projects were high-capital-cost projects, with the cost of funds in the domestic market still an issue that needed to be addressed.

According to Ogunleye, “we need to remove the impediments and ensure that we’re incentivizing gas development and attracting foreign investments, and the way to do that is to embrace decarbonization, adopt ESG standards, and ensure that our projects are attractive from a financing standpoint.

“Ease of doing business: We’ve talked about this a bit today. It’s important to understand that the ease of doing business is an issue that we must wrestle down because Nigeria has to be that hub of gas-based investment and unless we deal with value attack, multi agencies and all these constraints, it’s going to be a challenge.”

Commenting further on the missed opportunities in the country, Ogunleye cited the now-forgotten multi-billion-dollar Brass and Olokola liquefied natural gas (LNG) projects that would have added significant value to the country if they had been completed and production started.

“Most of us on this panel were involved to some extent in the Brass LNG, in OK LNG. They are mega billion projects that have struggled till date without taking FID.

“If today, we had three LNG projects in Nigeria, we can only imagine what that would deliver in terms of Nigerian content opportunity, value to shareholders, etc. So there is no-do-nothing option. We must come together; we must start tracking outcomes. As for Nigeria LNG, we are cooperating with all our shareholders and stakeholders,” Ogunleye added.

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