Brass LNG project may cost over $15bn

THE PUNCH Newspaper- Martin Ayankola

THE Brass LNG Project may cost over $15bn, a top official in one of the shareholding companies involved in the project, told our correspondent on Wednesday.

Although the project’s cost is still being assessed through estimates submitted by contractors, the official, who asked not to be named, said the cost would fall between $15bn and $20bn.

Brass LNG’s Final Investment Decision is expected to be taken in the first quarter of 2011. Construction is expected to start by mid-2011 and it is to be completed by 2016. Initially, cost estimates for the project had been put around $8.5bn

The Board of Brass LNG Limited in March, 2010, approved the inauguration of the Invitation to Tender for the project.

Chairman of the Board, Dr. Jackson Gaius-Obaseki, was quoted as saying that the ITT instrument represented a major milestone in the execution of the Brass LNG project.

However, a key shareholder in the Brass project, Total, has indicated that the project may not be ready until 2018.

In Total’s 2010 mid-year outlook, released on its website recently, the company, with 17 per cent interest in Brass LNG Limited, listed the project among those to be completed in 2018.

The company also said its Egina and IMA projects, would also be completed in 2018.

However, a source close to the Brass LNG project, who pleaded anonymity, said that the Brass LNG project should be completed by the first quarter of 2016.

The project is a two-train plant with a capacity to produce 10 million tonnes per annum.

“We are taking the FID by Q1 2011 and construction should start by mid-2011. We need five years to construct, so the project should be ready by early 2016,”the source said.

The Nigerian National Petroleum Corporation’s Group Managing Director, Mr. Austen Oniwon, recently called for the intervention of the Japanese government to get LNG Japan to expedite action in signing a deal with Brass LNG.

According to him, this will facilitate the timely taking of the FID on the project.

Oniwon made the call recently when the Japanese Ambassador, Mr. Toshitsugu Uesawa, and a member of the House of Representatives of Japan and Head of the Joint Mission for Promoting Trade and Investment to Africa, Mr. Yasutoshi Nishimura, paid him a courtesy visit.

Oniwon, who said he was happy with the response from LNG Japan with regard to investment in the gas sector, said, “We want the cooperation of the Japanese government to ensure that the Brass LNG deal with LNG Japan is sealed on time for us to meet the December target for signing the FID.”

According to a statement issued by the corporation, the NNPC boss, who traced the history of cooperation between the NNPC and Japanese companies to the days when the Kaduna and Port Harcourt refineries were built, called for similar cooperation in developing the gas sector.

Listing the specific areas where the corporation needed help, Oniwon urged the Japanese envoy to get Japanese companies and government to provide loans to finance gas projects and establish manufacturing companies in the country to transform Nigeria into an industrial hub.

Meanwhile, our correspondent also gathered that expenditure by shareholders on the pre-FID works at the site of the project at Brass in Bayelsa State, had risen to about $1bn.

“Expenses on Front End Engineering Design, constructing of access roads and preparing the sites for the plant trains could hit $1bn by year end,” a source close to the project had told our correspondent.

“This shows that despite the delay in taking the FID, the shareholders are fully committed to the project,” he added.

The shareholding structure of the company reflects that the NNPC holds 49 per cent; Eni, 17 per cent; Conoco Phillips, 17 per cent; and Total, 17 per cent.

Sources close to the project told our correspondent that the shareholders had earlier suspended taking the FID earlier slated for December 2008, when it became obvious that they could only guarantee 72 per cent of the gas needed for the project.

The contract for the Front End Engineering and Design of the proposed plant was awarded to Bechtel Corporation in late 2004.This followed the completion of conceptual studies that assessed the viability of building an onshore Liquefied Natural Gas facility in the region of Brass Oil Terminal operated by Nigerian Agip Oil Company.


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