LAGOS (Reuters) - Nigeria LNG has signed the engineering, procurement and construction (EPC) contract for Train 7, its major gas expansion plan, Nigeria’s oil minister said on Wednesday.
The long-awaited project is expected to boost Nigeria’s liquefied natural gas (LNG) output by more than 30%.
Nigeria LNG had previously announced that it would award the EPC to a consortium including Italy’s Saipem, Japan’s Chiyoda and Daewoo of South Korea.
In a statement, Saipem said the overall value of the contract was above $4 billion, with its share at roughly $2.7 billion.
“The construction phase of Train 7 can now commence in earnest,” Minister of State for Petroleum Timipre Sylva said during an online event on Wednesday.
NLNG, a consortium between state-run Nigerian National Petroleum Corporation (NNPC), Eni, Total and Royal Dutch Shell, signed its final investment decision on the Train 7 processing unit late last year.
Nigeria is rich in oil and gas but has been struggling to boost its output of both resources. Its LNG production has been steadily falling in recent years.
The Train 7 expansion comes at a difficult time. LNG prices in Asia and gas prices in Europe have hit record lows as the coronavirus pandemic worsened already weak demand.
Some buyers have cancelled cargoes as a result, and there are currently more than a dozen vessels carrying LNG searching for buyers, seven of them from Nigeria, according to data intelligence firm Kpler.
Still, Sylva and NNPC chief Mele Kyari said the Train 7 is a five-year project, giving demand time to rebound, and said it was key to Nigeria’s own economic recovery from the pandemic.
“Unless projects like this go on, the economy will not improve,” Sylva said.
Additional reporting by Ekaterina Kratsova in London; editing by David Evans and Emelia Sithole-Matarise
Our Standards: The Thomson Reuters Trust Principles.