People & Money

What Has Changed That Government Is Now Looking For Investors For Brass LNG

What has changed, that the Federal Government is now looking for investors that would revive the moribund Brass LNG, which was abandoned for 17 years?

This is one project that has suffered undeserved neglect and abandonment in the history of oil and gas projects in this country.  This is despite the fact that three Ministers of Petroleum Resources have emerged from Bayelsa state where it is located.

The problem of the project started when Chevron Nigeria one of the participating companies that was also expected to be a major supplier of gas to the plant decided to withdraw from the project because it was not allowed to be the project manager. When Chevron withdrew, it went to join Shell for Olokola LNG which was to start about the same period as Brass LNG.

These were two ambitious projects that would have increased Nigeria’s share in the global LNG market. But in Nigeria’s characteristic way of starting projects and getting them stalled along the line. These two companies were victims of such attitude.

Chevron left the project in 2006. It had the gas Brass LNG was looking for.

When Chevron withdrew its participation, Total Exploration and Production stepped in to take the place of Chevron. It stayed till 2017 when it also stopped funding the project. Earlier in 2016, it had written NNPC about its intention to withdraw but the response of NNPC to the letter was not palatable, as NNPC was alleged to have threatened to deal with the company if it withdraws by hitting it upstream. So Total had to tag along until the money it puts into the projects finished and it refused to put down another one.

The greatest blow to the project was the decision of Conoco Philip the biggest promoter of the project and the owner of the technology to pull out of the project in 2004. It was a decision that took the other partners in the project by surprise and all efforts to persuade the company to even be a consultant to the project fell on deaf ears.

The reason given by the company was it was rationalizing its portfolio in Africa. It sold its interest in Brass LNG as well as in some of its producing fields.

When it pulled out, it was paid $1 and got government guaranty not to be prosecuted. It was the project manager and had the design and plans. The Nigeria National Petroleum Corporation (NNPC) spent several millions of dollars to get the technology that was to be used by Conoco Philips. It was left without a substitute that could continue with the technology. Other investors that wanted to come into the project could because they are not used to the technology.

Shell technology was adapted with a lot of money spent on it. So much was put into the projects but it was never realized.

Also Read: Chevron Nigeria Looks to Retrench 25% of Staff

It would be recalled that the Goodluck Jonathan’s administration that inherited the project from Olusegun Obasanjo’s regime had to delay works on Nigeria Liquefied Natural Gas NLNG train 7 because of Brass LNG. Eventually, the final investment decision (FID )could not be taken on the project before it was abandoned.

The Muhammadu Buhari’s administration which has already spent seven years out of its eight years tenure seems to have just woke up to the realization that the projects has to be revisited, this is despite the fact it laid a good programmes for gas development in the country.  It declares 2021 to 2030 as the decade of gas.

It does appear that the project was never in contention until the Russia –Ukraine crisis broke out and the European Union which has 45 percent of its gas supply from Russia decided to turn its back against Russia.

In recent times, officials of the EU visited the minister of State for Petroleum Resources to solicit more gas supply from Nigeria to Europe.

Apart from this, the price of gas has moved up in such a way that many of the projects that were considered not economical before are now being considered for execution.

The Federal Government through the minister of state for petroleum Resource, Timipre Sylva had promised to complete the stalled Brass Liquefied Natural Gas (BLNG) project in the country.

The government is seeking new investors to revive the project, according to the Minister.

He disclosed this during an inspection of the project site in Twon Brass, Bayelsa State recently.

According to him, the Federal Government was eager to complete the project which was stalled 17 years ago due to some Final Investment Decision (FID) reasons, adding that it would be completed because of the manifold economic benefits it would bring to the nation.

The minister, who was joined on the project assessment by the Chairman and Managing Director of Greenville LNG, Eddy Broeke and Ritu Sahajwalla, said the government would give the project top priority because of its present policy trust in gas exploration.

He said, “You know the direction of the government as far as gas is concerned. We want to use gas as a transition fuel and also to use it to diversify our economy.
“You know that with gas you can get so many things and I have said that we can truly diversify our economy through gas.’’

He acknowledged the challenges faced in successfully executing the project in the past, noting that the government would do everything possible to encourage Greenville LNG investment in the multi-billion dollar Brass LNG.

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