Guardian

THE Final Investment Decision (FID) for the Brass LNG project may still not be taken this year, going by hints from authoritative sources.

The LNG project, expected to enlist Nigeria among the largest liquefied natural gas producers in the world may therefore not be actualised early enough.

The Guardian learnt that the promoters have not been able to reach the FID due to insecurity in the Niger Delta, non-passage of the Petroleum Industry Bill (PIB) and unfavourable gas pricing in the country.

Also, The Guardian gathered that ConocoPhillips of the United States’ divestment from the country, may also pose a challenge to the project, as the company is a major partner in the scheme.

The primary market for the LNG will be the Atlantic Basin (North American and Europe), where the company seeks to become one of the key players.

Shareholders in the estimated $15 billion project were earlier said to have been planning to take the FID by mid-2010. The FID for the project had suffered several postponements, as it should have been taken in December 2006 and later in December 2008.

Early last year, the Federal Government disclosed plans to reach the final investment decision before the end of the year.  This never happened as the various impediments hindering the project were yet to be resolved.

The Guardian gathered Thursday that there were still major hurdles on the way of the project that must be cleared before the FID could be signed and that they might even delay the FID till next year or beyond.

A top official of Brass LNG Limited told The Guardian that insecurity, lack of finance, inadequate gas price pricing has contributed significantly to the delay in the take off of the project.

The company was formed to construct and operate a Liquefied Natural Gas Plant to be sited on the Island of Brass, Bayelsa State in the Niger Delta, following a an agreement signed in 2003 by the shareholders.

Since 2003 till date, the promoters of the project have not been able to reach the final investment decision on the project.

The Chairman of Brass LNG Limited, Dr. Jackson Gaius-Obaseki, in the company’s 2012 message, assured that the project is expected to see its FID taken within the first quarter of 2013.

Gaius-Obaseki stated: “In recent times, there have been speculations about the future of the project as induced by news in several media channels that ConocoPhillips (COP), which is one of our shareholders, plans to divest from Nigeria and, in effect, from Brass LNG Limited.

“In June 2010, there was a similar report that, I, in company of the other stakeholders, took COP to task and they assured that they would remain and be part of decisions to move the project forward. Following this assurance, the Invitation to Tender (ITT) was launched and this led to our choice of preferred tenderers.”

He said: “Again, when the news of their exit from Nigeria came on air, I, in company of Nigerian National Petroleum Corporation (NNPC) nominated directors, met with COP executive management on the 27th of April 2012. Again, COP was palms up confirming their intention of a possible exit from Nigeria whilst committing to the realisation of that project through supporting it to FID.”

Following this development, Gaius-Obaseki explained that the FID for Brass LNG is in view considering the near completion of all fundamental requirements to its eventual actualisation.

He also confirmed that COP has continued to live up to its commitment to the project as it recently approved a budget that would lead the project to FID.

Brass LNG is a company incorporated under the laws of the Federal Republic of Nigeria. The Shareholders are Nigerian National Petroleum Corporation (NNPC), 40 per cent; Eni International, 17 per cent; Conoco Phillips, 17 per cent; and Brass Holdings Company Limited, an affiliate of Total, 17 per cent.

The contract for the Front Engineering Design (FEED) of the proposed LNG was awarded to San Francisco-based Bachttel Corporation in late 2004.  This followed the completion of conceptual studies that assessed the viability of building on onshore LNG facility in the region of Brass Oil Terminal operated by Nigerian Agip Oil Company (NAOC).  The FEED was for the two LNG trains, each nominally seized at five million metric tonnes per year.

Natural gas supplies for the facility is expected to come from the substantial gas reserves within oil and gas fields already operated by existing joint ventures.  It is also expected to give Nigeria to monitise part of its vast natural gas reserves.  The project enables partner companies to be important players in helping to meet the growing worldwide demand for clean energy, and strengthens their long-term relationship with NNPC and the Federal Government.