‘My vision of NLNG in another 30 years is actually 15 trains’

Tony Attah is the Managing Director/Chief Executive Officer of Nigeria LNG and the Vice President of Bonny Gas Transport. In an interview with FRANK UZUEGBUNAM, editor, West Africa Energy Intelligence, on the sidelines of World Gas Conference in Washington D.C, he talks about his optimism for natural gas and his vision for NLNG amongst other issues. Excerpts:

Many traditional LNG buyers are joining commodity trading entities in entering the LNG spot trading arena. What is NLNG plan for the spot market in the medium to long term?

Essentially, you may already know that we are sold out. I have committed contracts – short, medium, long terms. At this moment, spot trading does not mean much to us at NLNG even though we are already in the market for Trains 1, 2, and 3 re-marketing which are actually due by end of 2021.

What we are seeing is in response to long term in the whole definition of term from 20 – 25 years. The new long term is 10 – 15 years but I think the advantage we have is that we are not green, we already have off-takers who have tasted us and know what we can do so in terms of risks. We are not as exposed to the new fundamentals in the market around short or long term but I think the flexibility aspect of our positioning is what would be crucial. We are quite flexible to leverage the situation. In the end, it will come down to our own agility and how competitive we can be but whether it is long or short term really should not matter. It is about value and it is how you can create a better value today.

We are not very active in the spot market because we are completely committed but we do occasionally have one or two spots in case any off-taker is not ready to take but spots are not very popular with NLNG.

Looking at the market fundamentals at present, is it still a good business decision to go on with NLNG Train 7?

Absolutely. Ten years ago, it was fantastic business so I can just imagine 10 years later it has to be even better business. The glut anticipated is relative. If you think about 2016; the perception was that the whole world will be drowning in LNG and then 2017 will be the worst year for LNG market because there will be LNG all over the place. If you follow the trends and the reality that happened; the whole of last year, there was only one FID. Those predictions did not happen. Again, you hear there will be more glut because many projects are coming. The reality is; how many will truly come? For us, it is not about what will happen elsewhere but what we really want to do, so we stay with the fundamentals of our strategy to stay competitive, stay credible with our off-takers/buyers and look for additional value for our molecules in the marketplace.

Today, we have sitting buyers and when you talk to most of my customers, they describe us as responsible, reliable and trusted. Those 3 key attributes that define NLNG must count for something. There will be more volumes in the window as we expect Train 7 to come in, I think there will also be some volume coming in from other places. Some prediction is that global capacity will move from the over 285 million tonnes (MT) per annum capacity to about 400MT in 2025 but a lot of that is projections. Some of that is forecast but what I want to know is that the additional 8MT capacity that I want to bring to market is coming in a very competitive manner. As long as I am competitive, I do not worry too much about the market.

I see a lot of excitement on your face whenever you mention Train 7. Is that excitement real?

I am holding it down. I could almost fly on that excitement. The reality is that you have to be excited for Train 7 because as you recall, we have had this dream since 2007. Between 1999 and 2006, we were deemed the fastest LNG plant and LNG country in the world because every 18 months, we were adding a new train but since 2007 to date, we have not added any new capacity. So to see this dream coming to reality, that has to elicit excitement. Definitely, I believe it will happen.  We have actually put pen to paper on FEED so for me there is no reason to wane in terms of excitement. If anything, the excitement is growing even more because it is visible that Train 7 will be real. In fact, it is real.     

At one of the sessions here at the World Gas Conference, Maikanti Baru, NNPC GMD said Nigeria is targeting 10 percent of global LNG market. Do you feel the burden of the expectation? 

Not necessarily because a few years ago we were actually 10 percent of the global LNG market but we lost our position. Between 2007 and 2018 when we did not add an extra capacity, we lost our edge a little bit.

When we were number 3, we were firmly 10 percent of the global LNG market but because we have stayed static for so long and the market has moved on, we have dropped somewhere below 7 percent. So, I think it is a conversation around what my 30MT will amount to in 2023/24 when I bring Train 7 online relative to the projection that the market should be about 350MT.

There is a good chance that at 30MT, if the market does not move heavily, we easily could still be at 10 percent but perhaps it is a premonition that my additional 8MT per annum is not enough and I feel so.

We talk about Qatar. Qatar was just about 24 months ahead of us. Today Qatar is at 77MT and they want to hit 100MT by 2023 so no one is static. Essentially, Train 7 is not the destination. There has to be Trains 8,9,10.

I tell my colleagues at NLNG that my vision of the company in another 30 years is actually 15 trains. Some will say where will it be? You assume that because it is NLNG, it has to be on one location? Not necessarily. We have seen that in other climes. That vision has to be held positive that we have to continue to grow starting with Train 7 so 30MT per annum is exciting but it should not be the cap and I believe that is what the GMD was referring to. But the future is great!     

Is NLNG prepared to take a dive into the domestic LNG market?

Domestic LNG for us is quite a big market and that is the reality of what it means. Next year, would be 20 years of operations for NLNG as a company in terms of bringing volumes to the market which I believe is the purpose the company was set up.

Essentially, I can continue to take my volumes external to Nigeria but when we look at NLNG’s vision of being a global player that helps to build a better Nigeria, that right-hand side of our vision is a bigger driver of why we want to play in the domestic space. It is not so much about the competitiveness or so much a good market.

If you look at the country today; power is a big challenge, manufacturing not growing, industrialization almost tending to de-industrialization because of lack of energy source. That is what is really driving us.

Of course you do not want to go in there at a loss but we will find a way to make it competitive. I would not see it as long term. It is a bridge. Between when the upstream development will happen and the pipeline networks will interconnect and scale up domestic gas to take off in Nigeria, we can help by bringing some volumes into the country.

Of course, the challenge would be that accessibility would be the coastal states or cities but we are also aware that some other players are already looking at deepening domestic LNG into the transport sector. We are looking more at bringing LNG into the country for power and manufacturing just to help build a better country and bridge the space until the domestic gas infrastructure takes off in the future.

We have seen many milestones by NLNG with regards to liquefied petroleum gas (LPG) market. What next?

I think it is about scale when you look at LPG. Let me take you back a little. You may recall that before NLNG got involved in LPG, the entire country was at 50,000 tonnes per annum. Between 2007 when we got involved and now, the entire country has moved 10 times. We are now at 500,000 tonnes per annum and NLNG is contributing more than half of that. Last year, we did about 265,000 tonnes. The capacity we have committed to bring to the country is about 350,000 tonnnes.

The next thing is about scale. This is not scale for NLNG, this is scale for Nigeria. We are today working with the office of the Vice President, to see how we can get LPG to take the centrestage as catalyst for development and industrialization in Nigeria. The work we have done with KPMG shows a forecast of today’s true potential of at least a million tonnes per annum opportunity for LPG in Nigeria and 3 million tonnes in the next 5 years if everything we are working comes together.

I remember the president of Nigerian Gas Association referencing per capita consumption of LPG in Nigeria to be 2 percent when our neighbours, Ghana, is 5 percent; Senegal, Morocco are talking 16, 66 percent. There is big scope for us in terms of LPG so it is about scale.

Recently one of the opportunities we have done is to work with Nigerian Content Development and Monitoring Board (NCDMB) to get the first Nigerian-owned LPG vessel to start. That is a start and its part of how we are helping local capacity to develop with eye on the future to LPG scaling.

How achievable is zero gas flare considering the investment hurdles around capturing and utilisation of flared gas?

It is something that has to be done. First of all, a country like Nigeria, blessed with so much gas cannot be flaring. That is a fact. There are so many reasons it should not be that way. Environmentally, flaring should not be acceptable. Also, gas is money; if you are burning it away, you are loosing money so it also does not make economic sense. From sustainability point of view, we really must end flaring.

If you look at our company, the way we are set up, we are the main reason why Nigeria has achieved the success it has recorded today. Because of NLNG, gas flaring in Nigeria has reduced by more than 60 percent. If you look at today’s environmental reality and economic side, it just makes business sense not to flare. That is part of why we exist. What you have to do in the upstream is to gather these gas and we will buy it off you so there is no need to flare. We are ready to offer ourselves as a receptacle to take it. That is why I firmly believe that whatever target is set, if the political and economic will align, gas flaring will be a thing of the past. Unlike in the past when people will say if I gather the gas, where does it go? Today, NLNG is available. I think gas flare out can be a reality for Nigeria and really it has to be.

In the 2018 budget, the national assembly slashed the budget for Bonny-Bodo road which is one of the big NLNG’s CSR project. Is it something you are worried about?

Ordinarily, it should be. For a project to start and finish, you need consistent flow of funds. We have the cash layout. It is something my colleagues are looking at.

I think originally, about N10 billion was voted by the Ministry of Works, Housing and Power. To be fair, I think our cut is about 10 percent but if you look at it with a different lens, you know how appropriations and actual allocations work in government parlance.

We are not underwriting the project in the sense of underwriting everything. We are contributing 50 percent of it, we are the stabilization force to ensure that work goes on while we manage some of the interplay between government and how the budgets become appropriation and actual funding.

Ten percent reduction is not something I will ordinarily be happy about but in the end it is about work completion. We have seen it in past where this same project has been attempted and abandoned. As NLNG, we guaranteed the project will not abandoned because we take care of those vacuums that may be created. If the contractor do more than has been voted, we have to bridge that and hope that government knowing exactly how much they need to contribute would have to make up for it. You are never happy when your budget is cut but is it a source of concern to the extent that you worry too much for 10 percent cut at this time of the year, I am not too worried really.

What do you expect from the government and legislature to sustain the NLNG success story?

For everything NLNG does for this country, you have to expect support. In other countries, NLNG would actually be preserved and protected deliberately by government. As a minimum today, we expect national assembly to support us, defend us and even protect us because of the value we bring to the country.

If you look at our books, since inception, this company has delivered more than $15 billion in dividends to FG and since we became taxpayer in 2009, we have delivered $6 billion in taxes. We continue to guarantee that and it is almost taken for granted that something will come from NLNG.

I still remember talking to somebody in the budget office and he said we have a line for NLNG $1 billion we are expecting. That is almost an assured fund that will come in. If you have an entity, one company like NLNG delivering more than one percent of the GDP, the least you would expect is support but we also expect government to appreciate us enough to want to protect us and defend us to continue to deliver more value.

But I must say that we see some support especially for Train 7 because in my mind, this is the first time we have a government that is 100 percent behind the project. This government has its eye firmly on Train 7 but we need quite a lot of additional support in terms fiscals, legislation. That is the way you treat the goose that lays golden egg. That is the minimum – you would protect that entity.

In some of your public presentations, you keep saying; “It’s time for gas”. Is it just a mere mantra?

It is time for gas! But it has to be time. If you look at energy transition, the serious global call for de-carbonisation and you look at Nigeria which is almost a mono-economy in terms of forex earning, you will say oil and gas economy is less than 30 percent of the GDP but the foreign exchange earnings is still more than 95 percent from that sector. I think in the end, it is about looking deeper into the future of energy and asking yourself where is this going?

Recently, I sat in a session at World Gas Conference in Washington D.C where the debate was about where the energy mix will be. There were a few permutations, but in the end, you have to agree that gas will still be at the centrestage because gas is cleaner, affordable and available globally.

When I look at Nigeria and I listen to people describe Nigeria today as that gas nation with some oil, you have to take a different lens to say what can we do with this gas? Every time we talk about almost 200TCF, 192TCF of proven reserve that we know about but there is also 600TCF scope for recovery. What are you going to do with that and when? I say it’s time for gas because I believe it’s not a mantra and it’s quite credible. If you look at countries like Qatar, Trinidad & Tobago even Russia; they under-pined their whole economy on gas. We have talked about oil for over 50 years and with the decarbonisation drive in the energy transition that is coming, gas is positioning as the centerstage going forward. The future of Nigeria has to be gas that is why I say it’s time for gas but perhaps the way to say it is; if not now, then when?

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