With a population that has a higher number of children and elderly, Zambia is left with not enough workers. Its dependency ratio leaves it vulnerable to taking on too much future debt, regardless of any post-default restructuring solution.
Nigeria LNG CEO Tony Attah: “We are the largest taxpayer”
With competition growing rapidly across the continent and the globe, NLNG wants to move quickly ahead with a new unit to process liquefied natural gas (LNG).
Tony Attah, the chief executive of Nigeria LNG (NLNG) argues that the next decades will belong to natural gas. “We have been riding on the back of oil for more than 50 years,” says Attah, “now it is time to fly on the wings of gas. Most people don’t realise that Nigeria is more a gas nation than an oil one.”
The optimism is partly driven by where gas sits on the spectrum that runs from emission-heavy fossil fuels to renewable energy. “Gas is cleaner, fundamentally cleaner than coal, at least four times cleaner, maybe two or three times cleaner than oil,” says Attah.
As such, it is the ideal ‘amphibian’ energy source to bridge the gap between the massive baseload requirements of modern industrial economies and a carbon-free future. There are other dynamics at play, too.
For example, Germany’s turn away from nuclear power has made it the world’s largest natural gas importer, while Asian countries such as Japan have also become large importers of natural gas. “We are seven billion [people on earth] today. Over nine billion by 2050, which is not really that far off,” says Attah.
The dynamics are “more population, higher demand for energy but also new pressures around environmental challenges that the world is facing.”
Nonetheless, Attah says it is important for NLNG not to rest on its laurels. The pace of innovation is such that it is “enough to keep you awake at night as a CEO – everyone wants to be the disruptor, no one wants to be disrupted.” The explosion in popularity of solar-driven mini-grids, for example, or decentralised power distribution projects, make it tough to predict future energy requirements.
That uncertainty, however, was not the cause of the great hiatus in NLNG’s growth. “If I step back, between 1999 and 2006 Nigeria LNG was the fastest-growing gas plant in the world. Every 18 months we were adding a new train,” Attah tells The Africa Report.
Rather, he says, the complexity of managing the initial six trains stalled the implementation of the seventh much-trailed train – a purification and liquefaction unit. “We only started production 20 years ago, so we’re not really a very old country in terms of the LNG market. We’re just beginning to mature,” says Attah.
The financial position of the company has also improved because it has paid off its debts. “We have paid off the mortgage. It gives you a bit of flexibility to approach the market again,” he says. Train 7 would be a big boost for the company, increasing production from 22m tonnes per annum (MTPA) to 30MTPA.
For comparison, the global gas giant Qatar produces around 77MPTA.
The article continues below
Get your free PDF : Top 500 african compagnies 2018
A glimmer of hope
Complete the form and download, for free, the highlights from The Africa Report’s Exclusive Ranking of Africa’s top 500 companies from last year. Get your free PDF by completing the following form
The project is now slowly coming out of the blocks. Two front-end engineering and design (FEED) contracts were tendered in 2018, won by Saipem and KBR. “We have a dual FEED strategy, so we signed off two consortia to carry out the design in a competitive bid,” says Attah, who adds that NLNG will scrutinise those bids in July, ahead of the final investment decision in the last quarter of the year.
Nigeria has been making progress on local content.
Since 2010, all oil and gas projects in Nigeria by law must have a certain percentage of work done by companies in the country. That presents challenges in the case of LNG. “The capacity to play in the cryogenic world – where we cool liquids to -162°C – that’s not something that Nigeria has a lot of capacity in.”
Creative Local Content
Nigerian NLNG has found some creative solutions that use in-house knowledge, building from scratch in Nigeria rather than importing modules from abroad. “I have 100% Nigerian management. I don’t have any expatriate or foreign expert on my leadership team,” says Attah. “If you [were] to roll back the clock 20 years, you’d be lucky to find one Nigerian on the leadership team of this company. That is a major transition in terms of knowledge transfer, technology transfer and capacity building […].”
For Attah, Train 7 will be a turning point and the beginning of a new phase of energy development for the country. It is not too ambitious, he argues, to see Nigeria being the next Qatar, “growing multiple locations, growing multiple LNG plants”.
“Look at the resource base that Nigeria has. We have done a survey of reserve-to-LNG capacity. It is minute compared to others,” says Attah. Trinidad and Tobago, for example, has a 15MPTA plant, with 100trn cubic feet (TCF) of reserves. “I have over 200TCF of gas, plus 600TCF potential, which is why today we are number nine in the world [of countries ranked by gas reserves]. But if we prove our 600TCF, we go to number four. So the scope for gas in Nigeria is immense.”
He is acutely aware of other countries that are also ramping up their production capacity. While Qatar previously led the world with 77MPTA, Australia has usurped the top spot, now producing 89MPTA. The US is climbing strongly. “If most of the capacity there that we read about comes to fruition […] we don’t want to be pushed too far down. We need to raise our game.”
While praising the government’s support for NLNG, he has had to negotiate the occasional hostile attempt by legislators to unpick some of the corporation’s tax exemptions – once in 2008 and again in 2016. “I think it’s safe to say that there were quite a few misconceptions,” says Attah.
“And you cannot start to dig at the foundation of a company of this pedigree that delivers absolute value to the country. Today we are more than $100bn in revenues generated and over $15bn in dividends to government. That’s huge. We are the largest taxpayer in the country.”
This article first appeared in TAR108, the July edition of The Africa Report.