Construction of a Liquefied Natural Gas Infrastructure in Akwa Ibom State, Nigeria (A Proposal)

Abstract

NLNG is the most successful gas utilization infrastructure in Nigeria in term of income generation; generating over $108 billion in total revenue, and paying $8 billion for taxes, $17 billion in dividends, $13 billion as feed gas purchases to the federal government since it started production 20 years ago. Interestingly, this success has not been duplicated in other LNG companies; the Brass LNG and the Olokola LNG companies have been in the construction stage since their conception. This paper therefore proposes the construction of a 6MTPA LNG facility in Akwa Ibom state. The paper performed an economic analysis of the facility using a cash flow statement to determine its feasibility and profitability. The economic analysis forecasted at $1.6 billion initial capital investment gave a gross cash flow of $1.147 billion/year at peak performance, and a 6 years payback period. With a 28-year cash flow projection discounted at 10%, and 15%, the calculated NPV are $2.902 billion and $1.331billion respectively with an IRR of 26%. Additionally, a sensitivity analysis was carried out to determine the project performance under certain conditions and the analysis established that above the price of $5.5/MCF, the project will run at profit.