PCNGi, Arete sign $27.3m deal to construct 7mmscfd LNG plant

The Presidential Compressed Natural Gas Initiative (PCNGi) and LNG Arete Limited have signed a $27.3 million memorandum of understanding (MoU) to construct a seven-million standard cubic feet per day (mmscfd) liquefied natural gas (LNG) plant.

Michael Oluwagbemi, PCNGi chief executive officer (CEO), said the project aims to boost investment in compressed natural gas (CNG) infrastructure, expand its availability, and create new opportunities in the sector.

He said PCNGi is co-investing ($6 million) alongside LNG Arete ($12 million) and the Midstream Downstream Gas Infrastructure Fund under the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).

Oluwagbemi said the project will provide jobs for over 100 Nigerians while accelerating the development of CNG infrastructure in the northern region and secure a 25 percent equity stake in LNG Arete’s seven-thousand standard cubic feet per day (mscfd) mini LNG facility in Ajaokuta, Kogi state.

Oluwagbemi said the project will establish a key supply hub for CNG in northern Nigeria and beyond within 12 to 16 months, ensuring a stable and cost-competitive gas supply for underserved industries and residents.

He said President Bola Tinubu is determined to introduce affordable transportation programmes by harnessing the country’s abundant gas resources to meet the growing demand for industrial and transport gas, ensuring steady supply to end-users.

“Gas is cheaper, it is safer, and more reliable,” he said.

“Of course, the previous administration and this administration have been committed to moving gas from the region where it is primarily produced today, which is the southern part of the country, to the rest of the country.

“That is why the Nigerian National Petroleum Company Limited and its partners have been investing in the Ajaokuta-Kaduna-Kano gas pipeline.

“From the producing fields, the project will focus on a liquefaction plant and implant storage at Ajaokuta, and eventual pipeline trucks which will be able to move gas over further distances across the north of Nigeria.”

‘THE LNG PLANT WILL BOOST INDUSTRIALISATION IN THE NORTH’

Oluwagbemi said the LNG, once converted to CNG, will power plants, vehicles, and industries, boosting industrialisation across the north, including textiles, agriculture, processing, and manufacturing.

“The logistics, of course, of moving goods and food items from the north down to the south, especially, processed and manufactured products, will also be cheaper because of this project,” he said.

“And even more importantly, is that even when the north gets piped by natural gas in a few years’ time, this plant is still going to be very critical to enable LNG trucks that run more efficiently on LNG, even better than CNG.

“Those LNG trucks will begin to move Nigerian products from Nigeria to Ghana, and to Senegal, ensuring Nigerian products are very competitive and creating jobs.”

On her part, Hajara Pitan, project director at LNG Arete, commended Tinubu, the management of P-CNGi, and others who contributed to making the agreement possible.

“A major reason for the lack of development of the gas sector has been the fact that infrastructure and gas is expensive, but with the mini LNG technology, we’re able to participate as Nigerians in this sector in a major way,” Pitan said.

“Our aim is clear in LNG Arete to support the federal government in deepening gas utilisation across Nigeria, and especially in the underserved regions of northern Nigeria.”

Pitan said LNG is created by taking gas from its source, liquefying it through volume reduction, and making it easier to transport.