Olufola Wusu

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Enhancing use of LNG for Development…

The Federal government has signed a tripartite agreement worth N120 billion with Julius Berger, and the Nigeria Liquefied Natural Gas (NLNG) for the construction of the Bonny-Bodo Road and for the part-funding of N60 billion by NLNG. Today the Vice President, Professor Yemi Osinbajo SAN laid the foundation stone for the road.

LNG for Development in Nigeria
The relevance of LNG to development cannot be over emphasized. Nigeria can use LNG to facilitate her economic, social and cultural development, in particular in relation to Sustainable Development Goals.
The three main areas of benefits; increase in trade; energy, science, technology and innovation for development; and the need for environmental conservation.
This piece is meant to help improve understanding among stakeholders about the key developmental role of LNG; to encourage their support for LNG-related development projects and may help improve access by Nigeria and other countries in Africa, to investor led funding for such projects.

Onshore Emigration?
Oil majors in Nigeria recently sold off their “onshore assets” while acquiring “offshore oil blocks”; this may have been in support of Nigeria’s increased local content, participation policy or it may have been a practical solution in response to the challenges faced onshore and in the shallow waters; possibly due to the “Emergence of Social Normative Norms in Oil Pollution” due to lax enforcement of the law in the area of environmental degradation which may have resulted in prolonged host community hostility targeted at the International Oil Companies. Host communities have also repeatedly accused many oil communities of neglect.

Social Contract Theory vs. Corporate Social Responsibility
Corporate Social Responsibility “” seems to be gaining traction, with many companies coming to the firm realization that, the government gives you the license to carry out oil and gas activities while the community gives you the freedom to operate! CSR is a secondary responsibility, as under the Social Contract Theory government owes its people a duty to provide the basic amenities!

Interestingly, “Off Shore Deep Water Oil Blocks” seem to be devoid of community issues, relations, corporate social responsibility obligations, oil theft and other “disruptions” which have seemingly unsettled the IOC’S .

Tokenism vs. LNG for development
While many Oil Majors have had it rough with their host communities forcing many of them to abandon their onshore oil and gas assets in a rapid emigration offshore, NLNG has had a pretty rosy relationship with its host community.

It was reported that Bonny Kingdom in Rivers State will receive approximately N3 billion annually from the Nigeria Liquefied Natural Gas (LNG) Limited under a new agreement signed between the company and Shell Petroleum Development Company (SPDC) which transfers responsibility of driving sustainable community development from the corporate organisations to the community.

NLNG and Bonny Kingdom seem to be in love…
Reports have it that NLNG in conjunction with other stakeholders have come up with a plan to make Bonny Kingdom one of the most important investment destinations in West Africa.

The plan is called ‘Green Heart City’ it aims to achieve Human capital development, Economic expansion & diversification, Infrastructure development and Environmental sustainability. Bonny Kingdom will be home to a diversified economy with low unemployment rate, strong infrastructure and improved quality of life for its millions of skilled workers.

Benefits of the LNG Industry
The current global focus on gas in the world has great and positive implications for Nigeria. Nigeria has been described as a gas province with just a drop of oil. Nigeria has significant natural gas reserves, estimated at 192 Trillion Cubic Feet, TCF, and currently, ranks ninth in the world. The International Gas Union has ranked Nigeria 4thamong LNG exporting countries. With its abundant gas resources, Nigeria is positioned strategically for the age of natural gas which has begun! Natural Gas when frozen becomes LNG.
1. Economic Impact
Perhaps the biggest advantage to the oil and gas industry in Nigeria is the economic impact it has on state funding. The Nigerian Government is said to have received the sum of $3.7 billion in taxes and royalties, from Anglo-Dutch Shell Group. Managing Director of Nigeria Liquefied Natural Gas, NLNG, Mr. Tony Attah, was reported to have said the company has so far paid $5.5 billion in taxes and $15 billion in dividends to the Federal Government since his appointment in July 2016.

2. Employment & Job Creation
The oil and natural gas industry’s contribution to Nigeria’s overall economy can’t be overstated. In addition to the hundreds of thousands of Nigerians who have a job in oil and natural gas, gas exploration and processing may very well lead to a revival of manufacturing in Nigeria.
3. Gas plays a key Role in Other Industries
Natural gas will help Nigeria to develop clean alternative energy sources in various ways, such as the following:
• Natural gas is used to make fertilizer.
• Natural gas is used to make animal feed.
• Natural gas is used to make methane for hydrogen.
• Hydrogen is used to eliminate soot for cleaner diesel fuel.
• Electric companies use natural gas to generate clean power.
• Natural gas is a raw material that goes into lightweight cars, wind power blades, solar panels and energy-efficient materials.

4. Essential Power Source
Most experts agree that Solar and wind energy help save the environment, but Green World Investor believes that it is difficult for these energy sources to produce power 24 hours a day, seven days a week, once again natural gas saves the day.
However, Natural gas can produce power for your home all day long, year-round and is highly reliable due to the mature technology that has been developed during the many, many years of production.
5. Decreased Reliability on Other Countries
Nigeria currently spends a lot of money importing refined petroleum products ranging from petrol to diesel. Nigeria will save a lot of foreign exchange and create much needed jobs by utilizing the abundant natural gas we have for transportation, agriculture, power and manufacturing.

With appropriate counsel and the right measures the relationship between the Oil and Gas Companies can be cordial and mutually rewarding. Companies and host communities needing advice as regards how Oil and Gas can help bring about development should not hesitate to get in touch.
NLNG’s foot print in Bonny Kingdom is a pointer to the fact that oil and gas is a neutral resource that can be turned into a blessing based on the quality of leadership available.
Here is hoping that the newest oil producing enclave, Badagry Kindgom and the companies operating there take a cue from NLNG’s leadership style.

Olufola Wusu is a Commercial/Oil and Gas and I.P. Lawyer with Megathos Law Practice based in Lagos.

Olufola Wusu Esq. © 2017

Olufola Wusu is noted for his “dynamic practice” and “commercial acumen”. He is praised for his “first-rate skills” in assisting clients…