Oando Plc has notified the Nigerian Stock Exchange of a two gas supply agreement it signed with the Nigeria Liquefied Natural Gas Limited (NLNG) for the renewal of gas supply for the existing Trains 1-3 for a term of 10 years and for gas supply for the impending Train 7 for a term of 20 years.
The signing of the deal was chaired by the Group Managing Director, NNPC, Mele Kyari but was signed by the Managing Director, NLNG, Tony Attah; General Manager Commercial & Negotiations, NAOC, Massimiliano Bertona, who represented Managing Director of NAOC, Managing Director, Nigerian Petroleum Development Company (NPDC) – the exploration and production arm of NNPC, Alhaji Mansur Sambo and Oando boss, Wale Tinubu.
Why it matters: Tinubu explained that the deal will assist the government in its quest to grow the reserves and boost Nigeria’s gas base. It will also increase the country’s market share in the global LNG market. He added that the deal shows the potential of local players as Oando is the only indigenous company party to the NLNG supply agreement.
Tinubu stated that Nigeria’s economy would be a benefactor, adding that, “The signing of these two agreements confirms and consolidates our long-term partnership with NLNG. Furthermore, it is a validation of NLNG’s confidence in our operational track record. The execution of the GSA is another positive stride in our journey to becoming the leading independent exploration and production company. Being a 20-year guaranteed income stream, it will strengthen our financial position as well as demonstrate to our key stakeholders the company’s growth potential.
“Finally by way of this agreement and in line with our increased focus on sustainability and social impact, the JV is closer to its objective of achieving zero gas flare in the immediate future. We will continue to collaborate with our partners and other stakeholders in finding creative solutions to move both the industry and economy forward.”
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Highlights:
- The Nigerian Agip Oil Company (NAOC) Joint Venture made up of the Nigerian National Petroleum Corporation, NNPC/NAOC/Oando has a total supply obligation of 850 million standard cubic feet per day (MMScfd) for Trains 1–6. The Joint Venture (JV) is specifically responsible for supplying a daily contract quantity (DCQ) of 344.6MMscf/d for Trains 1-3 and 505MMscf/d for Trains 4-6, making the NAOC JV the second-largest gas supplier to NLNG. The first GSA is a renewal of the gas supply terms for Trains 1-3.
- In addition to the JV’s current supply to trains 1-6 and under the terms of the second agreement, the JV will be responsible for supplying a DCQ of 294.7MMScf/d for Train 7. Train 7 is expected to come on stream in 2024 and will bring the JV’s total supply obligation to 1.1 billion cubic feet daily (Bcfd). The execution of these agreements also effectively monetises about 3.3 trillion cubic feet (Tcf) of gas for the NAOC JV of which 666Bcf will be net to Oando.