Saipem-led consortium completes $4.2bn deal to build Nigerian LNG plant

A consortium made up of Saipem of Italy, Daewoo Engineering & Construction of Korea and Chiyoda of Japan has won a $4.2bn project to build an LNG plant in Nigeria, it was announced yesterday.

The Train 7 plant will be built on Bonny Island, in Niger Delta, by the SDC joint venture. The project is expected to take a little over five years to complete, once it has broken ground. When it is in production, the facility is expected to produce about 8 million tonnes of LNG a year.

Saipem holds a 60% stake in the project, with Daewoo E&C holding 30% and Chiyoda 10%. Saipem said in a press release this week that it expects revenue of about $2.7bn from its part of the scheme.

Stefano Cao, Saipem’s chief executive, commented: "This new project in Nigeria – where we have been operating for over 50 years – proves the validity of our management methods of Covid-19 emergency thanks to the flexibility of our organisational model and the practice of our people to work remotely."

He added that the win "confirms the overcoming of the link between Saipem’s share value and oil price".

This award follows a preliminary agreement signed in September with Nigeria LNG Limited (NLNG), which is owned by the Nigerian government, Anglo-Dutch energy company Shell, along with Total of France and Eni of Italy.

Tony Attah, the chief executive of NLNG (pictured), said: "With the award of the EPC Contracts to our preferred bidders, SCD JV, we are guaranteeing that our country remains significantly on the global list of LNG suppliers. This singular act clearly demonstrates our shareholders’ determination and resolve to sustain the economic dividends that NLNG’s monetization of our vast natural gas reserves offers our great country Nigeria".

Daewoo E&C has already built a number of gas and LNG plants in Nigeria, including the previous six trains that have been built on Bonny Island between 1997 and 2004. It is also poised to sign deals to build LNG facilities in Mozambique and Qatar.

Last year, Daewoo E&C and Saipem signed a strategic partnership to work together in the rapidly expanding LNG market (see further reading).

Image: Tony Attah, the chief executive of NLNG (NLNG)

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