ABUJA — Nigeria must provide investors with long-term policy certainty, credible commercial agreements and reliable project execution to attract the capital needed to develop its oil and gas resources, the Managing Director and Chief Executive Officer of Nigeria LNG Limited (NLNG), Adeleye Falade, has said.
Falade said Nigeria’s challenge was not a lack of hydrocarbon resources but the ability to convert them into commercially viable projects that lenders could finance with confidence.
He made the remarks during an interactive panel session titled “Unlocking Nigeria’s Oil Potential: The Push for More Oil” at the 32nd Nigerian Economic Summit in Abuja.
According to him, major energy investments require substantial upfront capital, with repayment and investment recovery periods often spanning 20 to 30 years. Investors must therefore be confident that the policies, commercial terms and institutional arrangements underpinning their investments will remain stable throughout the project lifecycle.
“Certainty itself is the product,” Falade said, emphasising that the durability of investment frameworks is central to attracting long-term financing.
He explained that lenders assess more than the quality and quantity of available resources. They also examine the predictability of project revenues, the allocation of risks and the capacity of project sponsors and other stakeholders to honour their commitments.
Consistent policy implementation, he added, is essential to building and sustaining investor confidence in Nigeria’s energy sector.
Train 7 demonstrates the value of investor confidence
Falade cited NLNG’s Train 7 expansion project, for which financing was secured in 2020 amid the COVID-19 pandemic, as an example of how a credible investment proposition can attract substantial capital despite challenging global conditions.
The project is being financed through internally generated cash flows and US$3 billion in external financing provided by 31 local and international financial institutions.
He attributed the financing success partly to NLNG’s established record of project delivery and financial discipline. The company had developed six operating liquefaction trains and repaid the loans used to finance those developments, demonstrating its ability to execute complex projects and meet its financial obligations.
“Track record compounds,” Falade said, explaining that each successfully completed development strengthened the company’s credibility and improved its prospects of securing subsequent financing on competitive terms.
By the time NLNG approached lenders for Train 7, he noted, the company could demonstrate a history of performance rather than rely solely on projections of future potential.
The experience offers a lesson for Nigeria’s wider oil and gas industry, where attracting capital depends not only on resource potential but also on the credibility of the institutions, contractual arrangements and businesses responsible for developing it.
Long-term contracts strengthen project bankability
Falade said the bankability of capital-intensive energy projects ultimately depends on three fundamental questions: “Who buys the product? Who carries the risk? Who stands behind the project?”
For NLNG, long-term sales and purchase agreements provide the commercial foundation for investment decisions. Some of these contracts span 20 years, helping establish future demand and revenue expectations before a final investment decision is taken.
Such agreements enable lenders to assess projected cash flows and determine whether a project can generate sufficient revenue to service its debt and deliver acceptable returns.
Falade also stressed the importance of allocating risks to the parties best equipped to manage them.
Buyers are better positioned to manage market-related risks, while the project company and its contractors are responsible for managing technical and operational risks within their respective areas of control.
A clear allocation of responsibilities, he said, reduces uncertainty and strengthens the financing proposition.
Higher plant utilisation reinforces operational credibility
Operational performance is another critical factor in determining whether an energy project can meet its financial commitments.
Falade reported that NLNG’s plant utilisation had risen to 81 per cent year to date, following approximately two years at around 60 per cent because of feedgas supply constraints.
He said the improvement demonstrated the facility’s capacity to deliver stronger operational performance when sufficient natural gas was available.
For investors and lenders, reliable feedgas supply and consistent plant utilisation are important because they influence production volumes, export commitments and revenue generation.
The experience also underscores the importance of addressing upstream supply constraints if Nigeria is to maximise the value of its gas resources and attract further investment across the energy value chain.
Local content must build globally competitive businesses
Beyond financing and operational performance, Falade argued that major energy projects should develop Nigerian businesses and technical capabilities that can support future investments.
He said local participation should be deliberately built into project development rather than treated as an incidental benefit or measured solely by the amount of money spent on local suppliers.
“Capability has to be deliberately built into what you do,” he said.
Falade cited NLNG’s experience with the construction of its six vessels, during which Nigerian manufacturers supplied products including furniture and cables.
According to him, some of these suppliers continued doing business with overseas companies after completing their contracts with NLNG, illustrating how participation in major energy projects can open doors to international markets.
He said the next priority should be to deploy and deepen these capabilities in subsequent projects, enabling Nigerian suppliers to gain experience, undertake more complex assignments and compete beyond the domestic market.
Falade urged policymakers to focus on strengthening local industrial capacity and creating an enabling business environment in which Nigerian companies can grow, innovate and participate more substantially in the energy value chain.
Policy consistency remains critical to Nigeria’s energy ambitions
The discussions at the 32nd Nigerian Economic Summit highlighted the relationship between investment certainty, commercially viable projects and the development of domestic industrial capacity.
For Nigeria, which seeks to expand oil production, increase gas utilisation and attract fresh investment into its energy industry, the challenge extends beyond possessing substantial hydrocarbon reserves.
Investors must be able to assess the rules governing their investments, establish reliable markets for their output, understand how risks will be shared and trust that projects will be delivered as planned.
NLNG’s Train 7 experience illustrates how an established operating record, long-term commercial agreements and credible financing arrangements can help turn resource potential into an investable proposition.
Falade’s central message was that Nigeria’s ability to attract sustained energy investment will depend on creating the certainty that capital requires while ensuring that major projects build Nigerian businesses capable of supporting the next generation of developments and competing in international markets.
