Concerned experts have predicted that Nigeria may lose substantial market opportunities if it further foot-drags in developing its abandoned gas projects. Current estimates show the country is losing about $1.5 billion revenue from that sector.
Two Nigeria Liquefied Natural Gas (LNG) plants located in Brass in Bayelsa and Olokola in Ogun State have been abandoned over the last five years. Stakeholders have therefore warned that Nigeria’s desire to expand its market share in the global gas supply may suffer serious setbacks if the two other LNG plants remain comatose.
Non-takeoff of the Brass and Olokola LNG projects has cost the country over $1.5 billion. Over $500 million and $1billion have been spent on the 5.5 million metric ton per annum Olokola LNG and 10 million metric ton per annum on the Brass LNG respectively, of which government through the NNPC accounted for over $700 million or 48 percent.
According to Victor Eremosele, a consultant who has just retired from the Nigeria LNG Limited, the market windows available for these projects now may soon disappear because by 2020, from available evidence, a situation will definitely arise where significant funds have been spent by other countries on their gas projects and these countries would now become new sources of supply of gas to the market.
Eromosele’s presentation at the World Petroleum Congress, in Moscow, Russia, needs to be closely looked at by the presentation administration.
According to him, the Shale gas from the United States of America and other gas discoveries elsewhere could make the it difficult for the two plants to find viable markets because the price of gas at the international market has started dropping and major discoveries of gas across Africa and the world, may sooner or later impact negatively on the revenue from Nigeria LNGs because of shrinking market.
“Nigeria should just get serious and fix those two other LNG projects. I mean, they have three LNG projects: get them started, and get them running and then compete; otherwise, that window will soon disappear because, by 2020, we will find a situation where significant funds have been spent by other countries and those Capex are actually converting to new sources of supply to the market,” Eromosele admonished.
He stated that prices will trend southwards to around $9 because there are about six exporters with licences in the US and it is expected that this would continue going forward. “This simply means that the market will change.”
According to him, the NLNG still survived three years after the focus shifted to Shale gas because it was selling most of our LNG products; instead of the Atlantic Basin in Europe and America, it started selling in Japan.
“This is however at a very high cost,” he said, “because, to get to Japan, it’s three times the distance of getting to Europe. So it’ll cost you more but, at the end of the day, we found the strategy worked.” It has become a very bad Nigerian style of governance to embark on grandiose projects without the dedication of ensuring completion.
The end result is that what starts with much fanfare becomes an embarrasing white elephant project and a financial black-hole. The Ajaokuta Steel Complex and the various steel rolling mills, and similar cases all over the country, have been sources of disgraceful reckless financial hemorrhage over the years.
In 2012 a presidential panel set up to look into cases of abandoned federal government projects with terms of reference that included taking inventory of all ongoing projects and determining compliance with due process, status of execution and financial involvement, as well as militating constraints for accelerated completion submitted its report.
That report itself has become a white elephant project despite identifying 11,886 abandoned projects nationwide. The administration must jettison the culture of waste and profligacy, starting with the two abandoned gas projects.
They are too important to the economic well-being and survival of the citizenry to be allowed to rot away. The investment that has gone into the projects already is very massive, so the government should through due diligence and transparent privatisation process kick-start the projects and see to their immediate completion. Gas is a very important natural resource and a critical revenue earner, but which has not been put to optimal use in the country.
Gas is still being flared and the date for ending the colossal waste has been procrastinated severally, indicating government’s lack of seriousness to deal with the dire situation in the sector. Government should give the resuscitation of the gas projects utmost priority.
Over the years in the country, successive administrations have paid lip service to the issue of abandoned projects, some even promised to complete abandoned projects which they never did, and this very disturbing state of affairs is common to all the tiers of government in the country.
Those in government must therefore understand that the very essence of governance is to serve and impact the polity positively. They must cultivate and imbibe the culture of self service and not personal aggrandizement. It makes sense to stop embarking on new projects for a season and concentrate on abandoned or uncompleted projects starting with the two comatose gas plants.