Expert Opinion

Nigeria LNG, ‘Sell or No-Sale?’


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No Sale’: The country’s 49% interest in the Nigerian Liquefied Natural Gas (NLNG) should not be contemplated for sale. It is Nigeria’s single highest revenue generating investment. A consortium of private Oil and Gas Corporations own Majority shares of the NLNG (51%), they operate and make management and investment decisions, making the NLNG a global model for successful State/Public – Private partnership.

The reasons put forward by the proponents for the sale of state-owned shares in the NLNG is the need to raise capital for fiscal stimulus towards achieving the implementation of the 2016 budget. In the first place, the proposed objective is not tenable. Nigeria’s 49% shares in the LNG cannot be sold and successfully closed on, with and funds received in the bank within the next 18 months.

In the case of the NLNG, due diligence, process formulation, board and corporate resolutions/approvals, etc., would take more than a year, and this is just the process preceding a formal approval of all shareholders for the commencement of divestment. The estimated timeline does not take into account public opposition led by unions and host communities against the sale of the asset.

The partners in the NLNG would also have the right of first refusal on any proposed sale, and negotiations between political interests and that of the Majority Private Shareholders would raise legal issues that would take some time to straighten out.

In the past five (5) years, annual revenue from the LNG to Nigeria has been between $1.5-$2.5bn. Applying a simple valuation model, taking into account current market conditions and an estimated potential growth of 25% over the next ten (10) years, the present value of Nigeria’s interest in the LNG is between $13.8bn – $23bn.

This amount cannot be banked in cash in a sale transaction within one (1) year, under current market conditions. In consideration of political risk, an astute investor would spread out payment at a highly discounted value for as long as possible, considering a sale could be rescinded by future governments as was the case with the sale of Nigerian state-owned refineries in 2007.

The NLNG is a great investment for Nigeria; this benefit is not optimized because of the structure of the NNPC, which holds the shares of the asset on behalf of Nigeria.

Revenues from Nigeria’s shares in the LNG have to pass through the NNPC, which is wholly owned by the state, mismanagement of the dividends occurs at this point. The NNPC has become more of a liability than an asset to the country; dealing with this and other related issues, require legislation.

There is no justifiable long-term benefit in selling Nigeria’s shares in the LNG, a quick sale as proposed is not feasible.

There is also no realistic path to raising funds for Nigeria’s 2016 budget by starting Oil and gas asset sales at the end of 2016, it is also unlikely that this can be achieved even for the 2017 budget.

For Nigeria’s shares in the NLNG, it is ‘no sale.’


To be continued


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Samuel Diminas, a Petroleum Geophysicist, is the Chair of the Board of Trustees of Spaces for Change, Nigeria.

He can be reached by email @


The views and opinions expressed here are those of the author and do not necessarily reflect the official policy or position of The PanAtlantic Journal





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