NLNG Targets Early Contracts For Trains-1-2-3 | Independent Newspapers Limited
Newsletter subscribe

Business, Power

NLNG Targets Early Contracts For Trains-1-2-3

Posted: May 26, 2015 at 12:07 am   /   by   /   comments (0)

By Obas Esiedesa / Abuja 


Deputy Managing Director, Nigerian Liquefied Natural Gas Limited, Isah Mohammed Inuwa, has assured that the first three trains of the company would have new contracts before the expiration of existing ones in 2021.

Inuwa said in Abuja at a stakeholders’ meeting of the company that strategies for the remarketing of trains 1, 2 and 3 have already been adopted.

He noted that the company was already talking to the existing contract holders and was hopeful of a positive outcome.

He said: “As you know, LNG contracts are long term and you don’t build plants until you have supply contracts that are at least equivalent to the life of those assets. Our contracts are normally between 20-25 years.

“The first three trains on the LNG, their contracts will begin to expire as from 2020-2021 and ordinarily as a matter of practice, you have to start re-marketing well before the expiring of the existing contracts; we have already developed a re-marketing strategy and we have fairly good idea of how we are going to re-market those trains, what the market conditions may likely be, what levers we are going to employ in terms of our re-marketing strategy and so we have a very clear idea of what we are going to do.

“We have already started talking about re-marketing those trains to our existing and potential customers. I can assure that before or by 2021, there will be new contracts in place for all the trains that are expiring.”

On when the Final Investment Decision (FID) on train 7 would be taken, Inuwa explained that “it is true that it has been hanging for a very long time but certainly if there is anybody that is interested in that train, then it is no better than NLNG because we understand its importance particularly given the current market conditions.

“Today, if you are going to compete, you can only compete on the basis of volume that you can put in the market and luckily enough, we have a reputation as a reliable supplier; we are efficient and have developed relationships right round the world in terms of the placement of our cargoes and so Train-7 is important to us not only from a strategic point of view because we want to retain our market share but also because we believe that given our current condition, we should be able to derive value out of Train-7,” he added.

Also speaking on the issue, General Manager, Commercial, Patrick Olinma, said there were about 16 condition precedents to be met before FID is taken for train-7.

“You know Trian-7 is not just market because that is just one part of it. There are other parts of it. Normally before an FID is achieved, you have 16 conditions precedents for that and we have to meet those conditions; feed gas, EPC contracts and who are the contractor, how much are they going to charge you for that and then you run your economics to know if you will make money or otherwise. You will only go forward when you achieve all of these and when you line up all these things and run your economics to determine profitability, then you can decide to move forward,” he stated.