By: Ifeanyi Izeze<\/p>\n
To say that the Brass LiquefiedNatural Gas (LNG) Project has been streamed
\nwith too many tentativeness is anunderstatement. Tailing the politics of
\nthe Brass project since2004 when thecompany was incorporated; it could be
\nconvincingly said that the joint venturepartners including the Nigerian
\nNational Petroleum Corporation (NNPC) areplaying tricks with the entire
\nproject obviously for sinister reasons. Without mincingwords, there is an
\nissue of genuine commitment by the shareholding partners tothe
\nactualisation and timely take off of the project.<\/p>\n
When the House ofRepresentatives, on May 31st 2018, resolved to probe
\ntheimplementation of the project which was alleged to have been poorly
\nmanaged, itwould have been a welcomed development if not that the
\nlawmakers themselves cannotmuster enough will -power to be honest in their
\ndealings with issues thatconcerns our collective interests.<\/p>\n
The Senate in January 2018 alsoraised an alarm over alleged massive fraud
\nin the NNPC as it relates to theBrass LNG project. It mandated its
\ncommittees on Public Accounts and Gas toinvestigate the alleged
\n$784,265,947.54 fraud and other activities of BrassLNG, including an
\nillegal account in the name of the Federal Government.<\/p>\n
As good as it sounds that bothchambers of the National Assembly have
\nresolved to investigate the fleet ofallegations of abuse and mismanagement
\nof funds running into billions ofdollars meant for initial take off of the
\nBrass project, the matter should betreated as both political and technical
\nsabotage of our national interests.<\/p>\n
When the projectwas originally set up in 2004, the initial project cost
\nwas pegged at about$3.5 billion. Today the cost of that same project
\nstands at over $25 billion asa result of what could rightly be described
\nas deliberately organised sabotageby several stakeholders including the
\nNNPC and the federal government itself.<\/p>\n
Originallyslated to be delivered in 2009, it is now 19 years down the line
\nand theproject is still on top of the desk at the planning stage as a
\nresult ofunnecessary delays caused by unnecessary bickering, lack of
\npolitical will and above alluncertainties around the Petroleum Industry
\nBill (PIB) which has remained aself-inflicted injury by the federal
\ngovernment.<\/p>\n
Obasanjoactually sowed the seed of discomfort in this project when he also
\ninitiatedanother LNG project in 2005 barely one year from the conception
\nof the Brassproject. He held the ground breaking ceremony for the
\nmulti-billion dollar OlokolaLiquefied Natural Gas (OKLNG) situated at the
\nborder town between Ogun and Ondostates when the Brass project was yet to
\nbe firmed up. The OKLNG as packaged byPresident Obasanjo was to be a joint
\nventure between the NNPC, Chevron, BritishGas and Shell. It was expected
\nto come on stream in 2012.<\/p>\n
And as if thatwas not enough, the same federal government also initiated
\nactions on NigerianLNG Train 7 project.<\/p>\n
So not surprising that as we talk today, noneof the three LNG projects
\nhas progressed beyond the drawing board despite thefact that billions of
\ndollars have already been expended on them. The decisionby the government
\nto concurrently undertake the three LNG projects is solely tobe blamed for
\nthe failure of any of them to take off till today.<\/p>\n
The OKLNGproject has been stalled since the international oil companies
\n(IOCs) partnerswithdrew from it due to what the shareholders called
\n\u201cvarying constraints\u201d,with only the\u00a0NNPC left. Likewise, the Brass LNG
\nproject, suffered setbacksince ConocoPhillips withdrew from the project in
\n2013 in addition toChevronTexaco also threatening to pull out.TotalFinaElf
\nalso at certain pointsangled to quit the project for reasons that could
\nalso be called \u201cvaryingconstrains.\u201d<\/p>\n
The decision by the FederalGovernment to undertake the three LNG projects
\n\u2014 Nigeria LNG Train 7, Olokolaand Brass LNG -led to the failure to
\ncomplete any of the projects several yearsafter their conception. The
\nFederal Government had spent over $3 billionalready on the Brass LNG
\nproject and over $2 billion on the OKLNG projects respectively.Delayin
\nlaunching the NLNG\u2019s Train 7 is said to be costing the country around
\n$25billion in foreign investment.<\/p>\n
It was ridiculous for thegovernment to have dabbled into many LNG projects
\nat the same time when it hasno two coins to rob each other as investment
\nfund.\u00a0 How can we have Brass LNG that is strugglingto take off and at the
\nsame time set up another LNG project- the OKLNG whilestill grappling with
\nwhat to do with NLNG Train 7?<\/p>\n
The question is: why did Obasanjochose to concurrently pursue three LNG
\nprojects instead of concentrating onfinishing one first? Evenat the best
\nof time for Nigeria, we do not have the resources to pursue threeLNG
\nprojects at the same time. And that was where the problem came in.<\/p>\n
Is it not surprisingthat up till now the issue of availability of gas
\nfeedstock for the project isstill unresolved? The Petroleum Industry Bill
\n(PIB) is also not helping mattersas would-be gas suppliers are already
\nprotesting what they called harsh fiscalregimes as recommended in the PIB
\nthat will make gas development not onlyunprofitable but very challenging.
\nThe suppliers are insisting they have toinvest heavily in gas development
\nif they are to commit to a Gas SupplyAgreement (GSA) for 25 years with
\nBrass LNG. And then the questionable abilityof the Nigerian National
\nPetroleum Corporation (NNPC) to fund its own share of thejoint venture
\ncash call for this development still adds to the quagmire.<\/p>\n
Commendably, thecompany, Brass LNG Ltd., has done a lot of optimisation in
\nthe project afterseries of pull outs, withdrawals and new enlistments. It
\nhas reconstituted itsmanagement\/shareholding team. It has dropped the
\nOptimized SM Process technology belonging to anerstwhile partner in the
\nproject, ConocoPhillip and adopted the APCItechnology used in building
\nNigeria LNG plants in Bonny. The Managing Directoris now from ENI (Agip).
\nAlso we have been told by the administrators of our oilconcerns that the
\ncost of the project has been scaled down to a level that willensure
\naffordable cash injection by the shareholders whatever that means.<\/p>\n
However, despite assurances bythe Federal Government that the shareholding
\npartners are fully committed tothe project, it still remains unclear how
\ncontending issues including funding,shareholders relationships, Off-take
\nAgreements with identified buyers arebeing addressed by NNPC\/Government,
\nand most importantly, availability of thenatural gas feedstock for the
\nproject.<\/p>\n
In 2008, after assessing theavailability of gas from the participating
\ninternational oil companies, it wasdiscovered that they could only
\nguarantee about 70 percent of the natural gasfeedstock needed for the
\nproject. And that was over a year ago. So theshareholders decided that
\nthey get the remaining 28 per cent gas needed beforeproceeding with the
\nsealing of the FID. How they are doing this is at bestblurred and at worst
\nobscured because almost all the partnering companies havebeen urging the
\nGovernment\/NNPC to invest massively in development of gasinfrastructures.<\/p>\n
Even as we talk now, the problemof availability and sourcing of the
\nnatural gas feedstock for the project seemsto have assumed the front
\nburner in the joint venture concerns.<\/p>\n
It seems obvious that some of thestakeholding companies in the Brass
\nProject are critical suppliers of naturalgas to the NLNG plants in Bonny.
\nThese companies would prefer to channel theiravailable gas resources to
\nmeet their contractual commitments to the NLNG andmay continue to
\nfoot-drag commitments to the Brass project except the FederalGovernment
\ninvests in development of new gas infrastructures.<\/p>\n
The National Assembly shouldactually go beyond probing the alleged
\nmalfeasance and impress on thePresidency (the executive) the urgent need
\nto expedite actions on this BrassLNG project to save the nation of
\navoidable and costly expenditures on theproject that is yet to take off.<\/p>\n
The way forward isfor the federal government to convincingly reassure
\npartners in the projectthat it is ready not only to meet its financial
\nobligations but also encourageother stakeholders who may no longer be
\nconvinced on the viability of theproject. In addition, the federal
\ngovernment should push towards fast tracking the most important
\ncontractagreement for the project- the Final Investment Decision (FID)
\nwhich hadsuffered several postponements as a result of contributing
\ntentative factors.<\/p>\n
While we are stillgrappling with aspects of the project that Nigeria does
\nnot have any controlover, the federal government should with the urgency
\nit deserves, firm up allpending agreements with operating companies that
\nare supposed to supply the naturalgas feedstock\u00a0to rejig interest in this
\nvery crucial project.<\/p>\n
We have progressed toa level on this Brass project that going back is not
\neven an option andfoot-dragging only increases the cost which has actually
\nshot up to over 300percent since the initiative was conceived in 2004. God
\nbless Nigeria!<\/p>\n","protected":false},"excerpt":{"rendered":"
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