By: Ifeanyi Izeze
To say that the Brass LiquefiedNatural Gas (LNG) Project has been streamed
with too many tentativeness is anunderstatement. Tailing the politics of
the Brass project since2004 when thecompany was incorporated; it could be
convincingly said that the joint venturepartners including the Nigerian
National Petroleum Corporation (NNPC) areplaying tricks with the entire
project obviously for sinister reasons. Without mincingwords, there is an
issue of genuine commitment by the shareholding partners tothe
actualisation and timely take off of the project.
When the House ofRepresentatives, on May 31st 2018, resolved to probe
theimplementation of the project which was alleged to have been poorly
managed, itwould have been a welcomed development if not that the
lawmakers themselves cannotmuster enough will -power to be honest in their
dealings with issues thatconcerns our collective interests.
The Senate in January 2018 alsoraised an alarm over alleged massive fraud
in the NNPC as it relates to theBrass LNG project. It mandated its
committees on Public Accounts and Gas toinvestigate the alleged
$784,265,947.54 fraud and other activities of BrassLNG, including an
illegal account in the name of the Federal Government.
As good as it sounds that bothchambers of the National Assembly have
resolved to investigate the fleet ofallegations of abuse and mismanagement
of funds running into billions ofdollars meant for initial take off of the
Brass project, the matter should betreated as both political and technical
sabotage of our national interests.
When the projectwas originally set up in 2004, the initial project cost
was pegged at about$3.5 billion. Today the cost of that same project
stands at over $25 billion asa result of what could rightly be described
as deliberately organised sabotageby several stakeholders including the
NNPC and the federal government itself.
Originallyslated to be delivered in 2009, it is now 19 years down the line
and theproject is still on top of the desk at the planning stage as a
result ofunnecessary delays caused by unnecessary bickering, lack of
political will and above alluncertainties around the Petroleum Industry
Bill (PIB) which has remained aself-inflicted injury by the federal
Obasanjoactually sowed the seed of discomfort in this project when he also
initiatedanother LNG project in 2005 barely one year from the conception
of the Brassproject. He held the ground breaking ceremony for the
multi-billion dollar OlokolaLiquefied Natural Gas (OKLNG) situated at the
border town between Ogun and Ondostates when the Brass project was yet to
be firmed up. The OKLNG as packaged byPresident Obasanjo was to be a joint
venture between the NNPC, Chevron, BritishGas and Shell. It was expected
to come on stream in 2012.
And as if thatwas not enough, the same federal government also initiated
actions on NigerianLNG Train 7 project.
So not surprising that as we talk today, noneof the three LNG projects
has progressed beyond the drawing board despite thefact that billions of
dollars have already been expended on them. The decisionby the government
to concurrently undertake the three LNG projects is solely tobe blamed for
the failure of any of them to take off till today.
The OKLNGproject has been stalled since the international oil companies
(IOCs) partnerswithdrew from it due to what the shareholders called
“varying constraints”,with only the NNPC left. Likewise, the Brass LNG
project, suffered setbacksince ConocoPhillips withdrew from the project in
2013 in addition toChevronTexaco also threatening to pull out.TotalFinaElf
also at certain pointsangled to quit the project for reasons that could
also be called “varyingconstrains.”
The decision by the FederalGovernment to undertake the three LNG projects
— Nigeria LNG Train 7, Olokolaand Brass LNG -led to the failure to
complete any of the projects several yearsafter their conception. The
Federal Government had spent over $3 billionalready on the Brass LNG
project and over $2 billion on the OKLNG projects respectively.Delayin
launching the NLNG’s Train 7 is said to be costing the country around
$25billion in foreign investment.
It was ridiculous for thegovernment to have dabbled into many LNG projects
at the same time when it hasno two coins to rob each other as investment
fund. How can we have Brass LNG that is strugglingto take off and at the
same time set up another LNG project- the OKLNG whilestill grappling with
what to do with NLNG Train 7?
The question is: why did Obasanjochose to concurrently pursue three LNG
projects instead of concentrating onfinishing one first? Evenat the best
of time for Nigeria, we do not have the resources to pursue threeLNG
projects at the same time. And that was where the problem came in.
Is it not surprisingthat up till now the issue of availability of gas
feedstock for the project isstill unresolved? The Petroleum Industry Bill
(PIB) is also not helping mattersas would-be gas suppliers are already
protesting what they called harsh fiscalregimes as recommended in the PIB
that will make gas development not onlyunprofitable but very challenging.
The suppliers are insisting they have toinvest heavily in gas development
if they are to commit to a Gas SupplyAgreement (GSA) for 25 years with
Brass LNG. And then the questionable abilityof the Nigerian National
Petroleum Corporation (NNPC) to fund its own share of thejoint venture
cash call for this development still adds to the quagmire.
Commendably, thecompany, Brass LNG Ltd., has done a lot of optimisation in
the project afterseries of pull outs, withdrawals and new enlistments. It
has reconstituted itsmanagement/shareholding team. It has dropped the
Optimized SM Process technology belonging to anerstwhile partner in the
project, ConocoPhillip and adopted the APCItechnology used in building
Nigeria LNG plants in Bonny. The Managing Directoris now from ENI (Agip).
Also we have been told by the administrators of our oilconcerns that the
cost of the project has been scaled down to a level that willensure
affordable cash injection by the shareholders whatever that means.
However, despite assurances bythe Federal Government that the shareholding
partners are fully committed tothe project, it still remains unclear how
contending issues including funding,shareholders relationships, Off-take
Agreements with identified buyers arebeing addressed by NNPC/Government,
and most importantly, availability of thenatural gas feedstock for the
In 2008, after assessing theavailability of gas from the participating
international oil companies, it wasdiscovered that they could only
guarantee about 70 percent of the natural gasfeedstock needed for the
project. And that was over a year ago. So theshareholders decided that
they get the remaining 28 per cent gas needed beforeproceeding with the
sealing of the FID. How they are doing this is at bestblurred and at worst
obscured because almost all the partnering companies havebeen urging the
Government/NNPC to invest massively in development of gasinfrastructures.
Even as we talk now, the problemof availability and sourcing of the
natural gas feedstock for the project seemsto have assumed the front
burner in the joint venture concerns.
It seems obvious that some of thestakeholding companies in the Brass
Project are critical suppliers of naturalgas to the NLNG plants in Bonny.
These companies would prefer to channel theiravailable gas resources to
meet their contractual commitments to the NLNG andmay continue to
foot-drag commitments to the Brass project except the FederalGovernment
invests in development of new gas infrastructures.
The National Assembly shouldactually go beyond probing the alleged
malfeasance and impress on thePresidency (the executive) the urgent need
to expedite actions on this BrassLNG project to save the nation of
avoidable and costly expenditures on theproject that is yet to take off.
The way forward isfor the federal government to convincingly reassure
partners in the projectthat it is ready not only to meet its financial
obligations but also encourageother stakeholders who may no longer be
convinced on the viability of theproject. In addition, the federal
government should push towards fast tracking the most important
contractagreement for the project- the Final Investment Decision (FID)
which hadsuffered several postponements as a result of contributing
While we are stillgrappling with aspects of the project that Nigeria does
not have any controlover, the federal government should with the urgency
it deserves, firm up allpending agreements with operating companies that
are supposed to supply the naturalgas feedstock to rejig interest in this
very crucial project.
We have progressed toa level on this Brass project that going back is not
even an option andfoot-dragging only increases the cost which has actually
shot up to over 300percent since the initiative was conceived in 2004. God