ABUJA/LAGOS (Reuters) - Nigeria signed a major gas expansion deal on Friday, a much-needed collaboration with oil majors that Nigeria LNG said would boost its liquefied natural gas output by more than 30%.
The agreement marks a moment of amity with international oil majors, even as a tax dispute and a new law increasing the government’s take on deepwater oil production have irked some companies.
The final investment decision on the Train 7 processing unit at the Bonny Island plant was signed by Nigeria LNG partners state-run Nigerian National Petroleum Corporation (NNPC), Eni, Total and Royal Dutch Shell in Abuja.
The new train is expected to boost output by 35% to 30 million tonnes per year, NLNG said in a statement, and will arrest a decline in Nigeria’s LNG output. NLNG operates six LNG processing units, known as trains, on Bonny Island.
The train 7 project has been delayed for several years. A previous deadline for a final investment decision in the fourth quarter of 2018 was not met.
The west African country is rich in oil and gas but has been struggling to boost its output of both resources.
Its declining LNG production last year pushed it down to the world’s fifth largest producer, with the United States taking its place at number four.
Total, Chevron and ExxonMobil are trying to pare back some Nigerian assets as they focus on projects elsewhere, including U.S. shale. Shell has also sold onshore assets in the country and has discussed further divestment.
NNPC Group Managing Director Mele Kyari said Nigeria’s President Muhammadu Buhari has directed NLNG to push forward to Train 12, and that they were on course to do so.
“It also signifies that there is renewed confidence over international investors, particularly our partners which we have known for a long time, to still agree to put money back into this country,” Kyari said.
He added the project was expected to generate $20 billion in net revenue for the government and create some 10,000 direct jobs.
Earlier this month, NLNG signed 20-year supply agreements with Shell, Eni and Nigerian oil company Oando to feed the Train 7 project. Commodities trader Vitol also signed a 10-year deal with NLNG earlier this month to buy 500,000 tonnes of LNG per year from other trains.
Reporting by Camillus Eboh in Abuja and Libby George in Lagos, Additional reporting by Julia Payne in London; editing by Jason Neely and Emelia Sithole-Matarise