A consortium of three Nigerian indigenous upstream and midstream gas companies – Falcon Corporation, ND Western Midstream Limited and First Hydrocarbon Nigeria (FHN) Gas Limited – yesterday signed an agreement worth $25 million to develop, own and operate a natural gas distribution infrastructure network within the Lagos Free Zone (LFZ).
The deal would see the partners deliver five million standard cubic feet of natural gas per day (5mscf/d) to the Lagos Free Zone, starting from 2024, with the volume of gas supply expected to progress over time to 40mscf/d as more businesses come into the free zone.
However, to actualise this target, which the consortium said was one of the outcomes of the Petroleum Industry Act (PIA) and the Decade of Gas Agenda of the federal government, a Special Purpose Vehicle (SPV) known as Optimera Energy LFZ Enterprise (Optimera Energy) has been formed within the LFZ.
The partners appointed Falcon Corporation to run the project and also appointed the company’s Deputy Managing Director, Mrs. Audrey Joe-Ezigbo, as the Managing Director of Optimera Energy.
Speaking at the agreement signing ceremony in Lagos yesterday, Joe-Ezigbo said the Optimera consortium was made up of like-minded shareholders passionate about a common goal, which included accelerating the further growth of domestic gas utilisation in Nigeria.
She said having reliable dedicated gas supply infrastructure installed in the LFZ would add tremendous value to existing industrial concerns and would increase the zone’s attractiveness to future customers.
She noted that the endeavour would be a big step towards actualising the objectives of the ‘Decade of Gas’initiative of the government, of which gas based industrial growth was a significant part.
Joe-Ezigbo stated, “The PIA provides the necessary regulatory environment for projects such as these to succeed in Nigeria. We look forward to working collaboratively with the Nigerian Midstream and Downstream Regulatory Authority (NMDPRA) in this project’s development and operation phases.
“The consortium members bring over 50 years of experience and expertise in operating across the Natural Gas value chain, from upstream production in the Niger Delta to downstream distribution to industries in Lagos.
“Our dedicated Project Team will work diligently with a strict adherence to the highest standards of safety, operational excellence, and regulatory compliance to deliver this project on time and under budget, as we have done within our respective portfolios.”
She further said that the partners were engaging all the regulatory agencies, particularly the NMDPRA in order to carry them along on the project, since the project would require the companies getting some licenses and permits from the regulators.
“When you look at the capacity of the companies on the table, not just from the zone, but from the SPV, these are companies that understand the language of compliance and have proven to be very good corporate citizens in the lifespan of the companies.
“So, every regulatory agency has been engaged; meetings have been held and they will continue to do so, because this project is going to demand several licenses and permits as we all know, which we have already initiated and are progressing significantly in collaboration with the regulators,” Joe-Ezigbo added.
Also speaking, Managing Director and Chief Executive Officer of LFZ, Mr. Dinesh Rathi, said in the company’s continued efforts at Lagos Free Zone to provide a world-class industrial ecosystem that enhances the competitive positioning of Nigeria as a manufacturing hub, its partnership with the consortium of Falcon Corporation, ND Western Midstream Limited and FHN Gas Limited was a landmark development.
With Lekki Port’s construction slated to be completed in December 2022, Rathi noted that the company needed to secure a reliable arrangement to meet the energy needs of its fast-growing tenant base, adding that the company was confident that its partnership with the Consortium would help it realise same objective.
He added, “This is a unique transaction in the history of Nigeria’s downstream sector wherein a consortium formed of reputable upstream, midstream, and downstream companies have come together to ensure gas supply to LFZ, the sunrise economic epicentre of West Africa.
“Under this arrangement, the consortium, through their special purpose vehicle, Optimera Energy, would deliver uninterrupted piped gas by early 2024 to all the enterprises within the Lagos Free Zone. We welcome the Consortium on this collective journey towards unlocking Nigeria’s true potential.”