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By Adewale Sanyaolu and Aidoghie Paulinus, Abuja
NIPCO Group has announced the planned investment of more than $3 billion in a Floating Liquefied Natural Gas (FLNG) project in Nigeria, with a proposed production capacity of about three million tonnes per annum (MMTPA) as the energy company moves to deepen its participation in the country’s gas value chain.
The proposed project, which could be located in the Escravos area of Delta State or Akwa Ibom, is expected to provide a new platform for monetising Nigeria’s natural gas resources for both export and domestic markets.
Managing Director of NIPCO Gas Limited, Mr. Nagendra Verma, disclosed this at a media briefing in Abuja at the weekend.
He said the company had been evaluating the project for the past six to nine months and was currently undertaking preliminary technical, commercial and feasibility studies.
The proposed investment would mark NIPCO’s planned entry into the LNG production business and represents a significant expansion from its established downstream oil and gas operations, including CNG, LPG, gas distribution, pipelines and fuel retailing.
According to the company, the final investment requirement, capacity, location, project configuration and development timeline will depend on the outcome of the feasibility studies, commercial evaluation, regulatory approvals, financing arrangements and final investment decision.
NIPCO said it was also exploring a strategic partnership with NNPC for the development of the FLNG project, while leveraging its existing relationships with NNPC and international oil companies to secure gas supplies and establish other strategic partnerships.
The project is envisaged to comprise an FLNG facility and associated marine, shipping and export infrastructure, with the potential to supply both international LNG markets and Nigeria’s growing domestic LNG market.
The company said the feasibility work would examine upstream gas supply and reserves, FLNG technology, production capacity, marine and export infrastructure, shipping and logistics, domestic supply opportunities, project economics, financing, environmental and regulatory requirements and the engineering, procurement, construction and commissioning strategy.
NIPCO expects to complete the feasibility studies in the coming months, after which the project’s configuration, investment requirements, implementation structure and development schedule would be further defined.
According to him, the proposed FLNG project also signals NIPCO’s intention to move further upstream and build a more integrated gas business around its existing downstream and midstream operations.
The company said its move into upstream oil and gas would complement its existing gas portfolio and provide opportunities to integrate gas sourcing, processing, transportation and distribution.
NIPCO said it would work with international technology providers, engineering companies, contractors, financial institutions and other strategic partners required to develop the project.
The company has invested approximately $2 billion in Nigeria’s oil and gas sector, covering pipeline infrastructure, CNG facilities, fuel retail outlets, LPG and propane facilities, logistics and distribution networks.
Its existing gas infrastructure includes more than 200 kilometres of gas pipelines, developed in partnership with NNPC Gas Marketing Limited, supplying more than 70 industrial and commercial customers.
It also operates a virtual pipeline network supplying CNG to more than 20 off-grid customers and has approximately 30 CNG stations across several states.
In the downstream retail market, NIPCO operates approximately 700 PMS, AGO and LPG outlets and has secured Gas Distribution Licences covering four distribution areas under the Petroleum Industry Act.
The group is also developing an 18-inch, 80-kilometre gas pipeline from Sagamu to Ibadan, alongside gas infrastructure in the Lekki Free Trade Zone and the Sagamu-Abeokuta corridor.
NIPCO said the proposed FLNG project was designed to support the monetisation of Nigeria’s gas resources while expanding LNG production and creating additional opportunities for domestic gas supply and exports.
It said the project could also stimulate participation by Nigerian companies and professionals in engineering, fabrication, marine services, logistics, operations and other supporting activities.
The company said additional LNG capacity could support industrial growth, energy security, foreign exchange generation and employment creation.
However, NIPCO stressed that the project remains at the feasibility and preliminary assessment stage, meaning that its proposed 3 MMTPA capacity and more than $3 billion investment estimate are not yet final.
The company said it would continue consultations with government agencies, regulators, upstream and midstream operators, technology providers, financial institutions and other stakeholders as the project progresses.
