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NLNG signs cash call deal with NNPC

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Nigerian National Petroleum Corp. (NNPC) and Nigeria LNG (NLNG) have signed a pre-payment agreement on the supply of gas to the six existing trains at Bonny Island.

The $2.5 billion deal was signed in Abuja in a ceremony involving NNPC’s head Mele Kyari and NLNG’s Tony Attah. Details on the agreement are scarce, as yet.

Kyari’s predecessor at NNPC, Maikanti Baru, speaking in July, had reported the signing of a framework agreement on a prepayment deal. The agreement will provide funding for NNPC’s cash call payable for upstream gas projects with the Shell Petroleum Development Co. (SPDC), Total Exploration and Production Nigeria (TEPNG) and Nigeria Agip Oil Co. (NAOC) joint ventures.

Baru also referenced plans for the Ikike project, which would “be funded through prepayment for gas by NLNG”. The Ikike field will be developed with Total Exploration and Production Nigeria (TEPNG). Costs for Ikike were estimated at $473.4 million.

Production capacity from the six trains is 22 million tonnes per year of LNG, requiring 3.5 billion cubic feet (99 million cubic metres) per day of gas. Over its lifespan, NLNG has liquefied more than 180.5 bcm of associated gas, which would otherwise have been flared. The NLNG plant is the largest source of gas consumption in the country.

Gas is provided to the NLNG facility via six pipelines, from a variety of sources including on- and offshore under long-term supply agreements with each joint venture.

According to a report from NLNG published this year the company has paid $28bn to joint venture suppliers of feedgas, of which 55-60% has gone to the federal government. This comes via NNPC’s stakes in the joint ventures. NLNG has also paid out more than $36bn in dividends over the years, of which 49% has gone to Nigeria.

A final investment decision (FID) is expected on Train 7 at NLNG by the end of this month. The seventh train will increase capacity to around 30mn tpy. A consortium of Saipem, Chiyoda and Daewoo E&C (SCD) were chosen in September to carry out engineering, procurement and construction (EPC) work on the train.

NNPC has a 49% stake in NLNG, while Shell has 25.6%, Total 15% and Eni 10.4%. FID was taken on the first train in 1995, with the sixth in 2004.

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