The board of the Brass Liquefied Natural Gas (LNG) Ltd has disclosed that pre-investment spending on the LNG project located on Brass Island, Bayelsa State has exceeded $1 billion.
Chairman of the board, Dr. Jackson Gaius-Obaseki stated at the company's annual general meeting in Abuja that expenditure on initial projects that would lead to a Final Investment Decision (FID) and completion of the project has reached over $1 billion without any loss of quality.
The Brass LNG project is expected to see its FID taken within the first quarter (Q1) of 2013, despite earlier indications by one of the project's promoters, ConocoPhillips, that it wants to sell its assets in Nigerian.
Speaking on the progress of work on the two-train, 10 million metric tonne per year (mmt/y) Brass LNG project, Gaius-Obaseki said: "As at today, our pre-investment expenditure has hit over 1 billion dollars, making it one of the highest for such projects in the industry."
He noted that good steps had been taken to push the project further, adding, "I am happy to report that phase 1 of the early engineering works has been completed and approval given to commence phase 2A of the early engineering works.
"Phase 2B, which would include Front End Engineering Design (FEED) verification will be completed as scheduled; during this phase, the key activity will be the award of contracts for the long lead equipment items in order to support the Gas Trains Engineering and Procurement (GTEP) schedule.
"Negotiations on the GTEP contract have reached an advanced stage with notable progress. In all, Engineering and Procurement Contract (EPC) activities are going well and on schedule."
He explained that bids for the major EPC contracts are currently being evaluated, adding that success was achieved in reducing the estimated project capital expenditure, while negotiation for the Gas Supply Agreement (GSA) with gas suppliers will commence soon.
"The LNG sales negotiation processes has been concluded while negotiation with marketing joint ventures is at a final stage and comfort is drawn from the fact that the project is indeed moving forward.
"We know who the gas suppliers are and their reserves have been certified, so we are sure that they can do it, there won't be issues of gas supply disruption to the project when it finally comes on stream because the suppliers would have signed a binding agreement with us that has penalties."
In relation to social development and adherence to the Nigerian Content Act in its execution of the project, the chairman said: "In spite of the fact that it will require heavy investment, the project will bring to the country several billions in revenues.
"We believe that this is a project that will bring more of Nigerian capacity in line with the local content act. At the peak of our construction, we will be requiring about 15,000-18,000 workers."
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(Originally published July 9, 2012, in This Day.)