Nigeria Liquified Natural Gas (NLNG) Limited is in talks with a consortium of banks to finance a $10 billion expansion.
Leading the local banking consortium is Zenith Bank Plc and Guarantee Trust Bank Plc. They will together with the other eight pull in about $2 billion while the remaining will come in from foreign banks and some other export-credit agencies. Chief Executive Officer of NLNG, Tony Attah said the funds would go toward building the gas plant’s seventh train, expected to boost output by 40 per cent.
Nigeria LNG has appointed Guaranty Trust and Sumitomo Mitsui Banking Corp. as financial advisers for the fund raising that will be a combination of debt and equity.
The seventh train will cost as much as $7 billion to build, with another $3 billion going for gas-gathering projects and pipelines needed to feed the new unit.
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Nigeria is exploiting all options of increasing its gas output to help meet rising natural gas demand.
With the planned expansion, output is expected to reach 30 million tons a year when completed in five years, from the current 22 million tons.
Nigeria has already lost its position as the fourth-biggest exporter of gas, overtaken last year by the United States. This year, American LNG is further expanding while Russia is also ramping up shipments from its Yamal LNG plant in the Arctic.
Nigeria LNG on September 11 moved closer to taking a final investment decision on the project when it named Saipem SpA, Chiyoda Corp. and Daewoo Engineering & Construction Co. Ltd. as the successful bidders to build the new plant. The company signed a letter of intent for the engineering, procurement and construction contracts with the builders, a key milestone toward a final investment decision.
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The company’s plant on Bonny Island supplied more than 300 LNG cargoes last year including 51 spot sales. NLNG, as it is known, has signed sale and purchase agreements with existing customers to take the additional volumes from the new plant while it expects that aggregate market growth will be driven by demand from emerging markets, including new destinations such as Pakistan, Bangladesh, Jordan and Jamaica, the CEO said.
The CEO said that a re-marketing effort for volumes from its older trains 1, 2 and 3 that began in 2017 is now nearing a close and he expects bilateral agreements with new and existing buyers will be signed by October.
LNG buyers are now increasingly shifting toward shorter contracts as more cargoes are now sold on the spot market, he said. About 32% of global LNG imports last year were on spot or short-term basis, according to GIIGNL, an industry body of importers.
“We see that kind of behavior in the trains 1, 2 and 3 re-marketing where I can positively say the average tenure was about 10 years. Not many people want contracts for 20 years,” according to Attah.”
