Nigeria’s abundant oil and gas resources alone will not attract the financing needed to develop them. Investors require confidence that agreed terms will endure, buyers will take the output and operators will deliver, Nigeria LNG Limited (NLNG) Managing Director and Chief Executive Officer Adeleye Falade said on Monday.
Speaking at the 32nd Nigerian Economic Summit during the interactive panel “Unlocking Nigeria’s Oil Potential: The Push for More Oil,” Falade said the country’s challenge is not a lack of resources but the ability to convert them into bankable projects that lenders are willing to fund.
This was contained in a news release signed by Sophia Horsfall, the company’s General Manager, External Relations And Sustainable Development.
Quoting the NLNG MD,the release stated “Certainty itself is the product, Investments require substantial upfront capital and recovery periods of 20 to 30 years depend on confidence that the terms underpinning them will hold throughout their life.”
For lenders, assessment goes beyond resource quality to the durability of the investment framework, predictability of earnings and the ability of parties to honour commitments. Consistent implementation is essential to sustaining investor confidence, he stressed.
Falade pointed to NLNG’s Train 7 financing, secured in 2020 amid the COVID-19 pandemic, as evidence of what a credible investment proposition can achieve. The project is funded through a mix of internally generated cash flows and US$3 billion in external financing from 31 local and international institutions.
That financing rested on a track record built over successive expansions. NLNG had developed six operating trains and repaid the loans that financed them, giving lenders proof of its ability to deliver projects and meet obligations.
“Track record compounds,” Falade said. Each successful development strengthened credibility and helped secure subsequent financing on more competitive terms. By the time NLNG sought funding for Train 7, lenders could evaluate a long history of performance rather than a promise of future potential.
He said the financing of capital-intensive projects ultimately rests on three questions: Who buys the product? Who carries the risk? Who stands behind the project?
In NLNG’s case, long-term sales and purchase agreements, including contracts spanning 20 years, establish the commercial foundation ahead of a final investment decision. These agreements convert projected production into cash flows against which lenders can provide funding.
Bankability also requires clear risk allocation to those best placed to manage it. Buyers handle market risks while the company and its contractors manage technical risks, he explained.
Operational reliability further strengthens the investment case. NLNG’s plant utilisation has reached 81 per cent year to date after approximately two years at around 60 per cent due to feedgas constraints. The improvement shows the plant can deliver when sufficient gas is available, reinforcing the link between reliable operations, predictable production and lender confidence.
Beyond attracting capital, large-scale projects must leave behind businesses and skills that can support the next generation of investments. Local participation should be deliberately developed rather than left to chance or measured solely by money spent, Falade emphasised.
“Capability has to be deliberately built into what you do,” he said.
He cited the construction of six vessels for which Nigerian manufacturers supplied products including furniture and cables. Some suppliers continued doing business with the overseas companies after NLNG’s orders were completed, showing how participation in a single project can open access to international markets.
The next opportunity, he said, is deploying these capabilities on subsequent projects to keep Nigerian suppliers engaged, deepen their experience and enable them to undertake increasingly complex work. He urged policymakers to focus on growing local capacity and creating an enabling environment for business to thrive.
The 32nd Nigerian Economic Summit provided a platform for discussions on policies capable of unlocking Nigeria’s oil potential. The panel underscored the importance of investment certainty, bankable projects and stronger local capabilities to attract capital while developing Nigerian businesses that can support successive energy projects and compete globally.
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