Mr Tony Attah, the debonair Managing Director and Chief Executive of Nigeria LNG Limited, biggest sub-Sahara African single investment, is an optimist. As a gas industry expert, the complete indices for the development and growth of Nigeria’s multi-billion dollar investment seem to have germinated on his palms. In this comprehensive one- hour interview, the CEO affirmed that the expansion of Africa’s premier gas plant is over- due and has taken off in a manner, which will see its further growth as a major challenge to the shareholders, going forward. He took a global view of the industry as well as a well- articulated expert’s view on his host communities and the safety responsibilities of the global company. The interview is an opus! He spoke to Nik Ogbulie’s AFRICA REPORT. Excerpts;
The long dialogue over Train 7 seems to have been won with the signing of the front end engineering design (FEED). I say congratulations, but then, what does this mean to the Nigerian economy?
Perhaps it means everything because I have been in the industry now for more than 27 years, so I am quite conversant with what goes on and what kind of projects are happening. At the moment, I am not sure that there is any project that is bigger, at least within the gas space. So this is really a very big opportunity for Nigeria on the back of the potential of the investment value. I mean, if you look at it we are talking about $7 billion dollars investment which you can link to foreign direct investment coming into the country.
In the midstream we are looking to spend about five billion over the next five years building our Train 7, but we have also enabled the upstream to develop the gas that we will need to run Train Seven. In the end it’s really about that global play for us. So for a long time, we have been on just 22 million tons since 2007. It is worthy of note that between 1999 and 2006, we were actually the fastest growing LNG plant in the world. We built six trains and every 18 months we were adding a new train but since 2007 we have not made as much progress with our Train 7, but we believe that the time is right and the time is now. On the back of growing that capacity would come in my mind what I believe is one of the most important opportunities for the Niger Delta. It’s about employment and job creation.
Easily, we see between the upstream and our own midstream project, more than ten thousand jobs and we believe 10,000 to 18,000 jobs in the time frame and for us that is a major opportunity for the Niger Delta and a major opportunity for Nigeria. It is about the balance and stability of the Niger Delta and I am a firm believer that the Niger Delta narrative can be reset on the back of unemployment because, haven being in the Delta for more than 25 years as I mentioned, the key fundamental root causes of the Niger Delta issues are really around poverty and unemployment, and my professors would say that any one you can get rid of, will get rid of the other one. If you get rid of poverty, unemployment will disappear. If you get rid of unemployment, poverty will disappear because currently it is a vicious circle where they are feeding on each other. If you look at the Amnesty Programme, at least from the onset, it was just 35,000 people and it was that programme that brought the relative peace that we still enjoy today in the Niger Delta.
So, think about one project that is bringing about 18,000 job opportunities. On the back of those job opportunities will be skills acquisition, development for our people, increased local participation and local contents will spiral and grow. So, those are some of the additional benefits that we believe. More than that, there will be foreign direct investments into Nigeria over a six- year window and that is very positive and we are quite proud of this project.
Being a new development, can you give us the anticipated cost of the Train 7 in contrast with initial investments in the company over the years?
Well, with a friction of time, I don’t think you can actually compare the projects. The market has moved on and by the way, the first two trains are smaller trains, so, pound for pound comparison may not be what it is, but it is on record that this company started on the back of investments from both the shareholders and the government. Overall, about $3 billion for the first two trains but essentially on the back of loans it came to about $5.45 billion between the shareholders. So a little over $5 billion was what we deployed to build the six trains at the time.
But as I said, the market has moved on and the cost of steel is in a completely different space today. But in terms of our own credibility as a company, we have made so much progress, so much so that whatever loans we have taken earlier on in the life of Nigeria LNG has been complete payoff, this is quite instructive as we celebrated this in London in July. So, essentially you can almost say that Nigeria LNLG is debt-free, its zero, we paid off every loan that we took. And we paid it off without miss. We never missed one disbursement or one payment over the 18 to 20 years tenure. So for us we see ourselves as a borrower of choice and we believe that we are now much more credible in the market and that is what we are riding on, to go to the financial market to manage the investments for the new trains.
Considering the increasing cost of funds in the international market, what kind of funding applications are you anticipating, assuming your shareholders will demand the direct execution by you?
It is a combination. I am sure you are familiar with the financial market and finance in general for projects of this nature. You could either do corporate finance or project finance. In the end for us would be a mix of both but as you probably are aware, we have also recently just nominated a financial adviser. So a lot of the conclusion around what options we would choose will really depend on the work of the financial adviser, but I can say today that it will be a combination of both corporate financing for the upstream scope and project financing for the midstream. But either way, we would be looking for the best combination to be able to manage how this is funded, which is how we go.
So, what is the future of the global gas market and where do you put the Nigerian economy in that perspective? You can look at it from the point of view of the development where your 22 year contract is already getting to the end and you are now looking at new contracts and in line with the developments globally with gas plants are all over the place. The markets are coming up. Would you get that type of long term agreement, considering the new developments.?
Let us start with your comments about the gas plants being all over the place. What we know, I like to refer to it as the’ trilemma’, which is the current reality of today’s energy globally. We know that, for instance, we are about 7 billion people globally today and by 2050, we will be 9 billion. So essentially, that is like adding one new China and one new India to the world. So population is growing. Energy demand is growing on the back of improving fortunes of people generally around the world. So more people require more energy but the difference is that the world requires cleaner energy.
So population is growing, energy demand is growing, but a particular type of energy cleaner on the back of the global warming, climate change, the two degrees increase in temperature that the arrangement in Paris talked about, is what is needed. So there is huge scope for a change. In today’s reality, we believe that gas will continue to be relevant. Some will even say as against the current mix where gas is about 24 per cent, gas will grow to about 26 per cent in the energy mix, coal will go down because it is seen not as clean, gas is at least three times less to producing compared to coal and oil. So the relevance of gas will continue to grow, so much so that the EIA report will suggest that, in terms of world electricity generation by 2040, renewable energy would account for 21 per cent, which was not the case. So there is more and more desire to have energy that is clean and green.
But all that is not enough to generate the kind of energy that I would say the world is looking for. But the fair balance, which is why gas is referred to as the bridging energy, is the bridge until we are able to find a technology to be able to resolve the clean supply, is gas.
But for Nigeria, I believe that gas is the next big thing. Gas is the biggest opportunity and as we like to say in Nigeria LNG, it is time for gas. I think oil has taken us this far, but on the back of our reserves, knowing what I know that from the barrels of oil equivalent, we actually have by far more gas than oil. Which is why in some circles they like to see Nigeria as that gas nation that has some oil, which for a Nigerian may not be clear but the truth is that we have by far more gas than oil and if you know that most of the gas that we are talking about today are the 190 TCF of gas proven was not found from exploration. Most of it was found while exploring for oil. So Nigeria has to grow on the back of gas and the opportunity is just immense because we have seen countries like Qatar do it, where they have gone from GDPs of below $2005 to more than $150,000 per capital compared to Nigeria today.
So it is essential to just realize that gas is the future, power is a major challenge for Nigeria, gas can resolve that, manufacturing is a big deal , gas can be a catalyst to that. So just think about gas to power, gas to transportation, which we have seen, pharmaceuticals, petrochemicals, even in the agro industry, especially from a fertilizer point of view. You could almost conclude that gas is everything. So we like to see gas as the catalyst for the future and we believe that Nigeria’s industrialization and growth would have to be underpinned by gas and for us, it is time for gas. Gas is the future but that future is now.
So the domestic gas market is huge. Can we have your exclusive plan and maybe master plan for the Nigerian domestic market?
Gas is the future but as I said, that future is here. And I mentioned that we are an enabler and a catalyst for gas development because we are ready to take whatever gas is developed and I told you what we currently do in terms of LPG, which is domestic really. But I really feel a sense of joy when I talk about our contribution to LPG in the country and it is multi- dimensional, starting with the fact that it is providing energy source, a clean and affordable energy source to people, to families, but more on the back of the information we have that about four million people die from smoke inhalation, while trying to cook using other energy sources, and in Nigeria that is about 100,000 that consists of mostly women and children trying to put food on the table, inhaling smoke and ultimately dying as a result of complications from that.
We believe making LPG available actually helps to save lives but beyond that, it also helps to clean the environment because not much of pollution would happen. It protects the environment. If you look further north there is quite a lot of desertification happening. Some of it is from deforestation and most of the deforestation go into deployment for energy, so all that would reduce that, even the forex.
Today, we are spending a lot of money importing kerosene, actually there is no need importing kerosene when you have gas. So LPG for domestic use is quite crucial but as I mentioned, on the back of LPG you can have development, LPG for transport, for power, domestic use, industrialization, most of the oxy-acetylene welding work, you can do a lot with LPG.
I believe that we are at vantage in terms of our position as a catalyst to help Nigeria to scale up and domestic gas is about Nigeria’s development. If you do not develop domestic gas for Nigeria then we will be losing quite a lot of opportunities, but the capacity is there. As I said, for at least 5 billion score of gas consumption in Nigeria has to be taken, we can’t afford to miss that.