By SIMEON OGOEGBULEM
The Managing Director and Chief Executive Officer of Nigeria LNG Limited (NLNG), Adeleye Falade, has said Nigeria must provide a predictable investment environment, reliable commercial agreements and clear risk sharing arrangements to attract the capital needed to develop its oil and gas resources.
Falade made this known at the 32nd Nigerian Economic Summit in Abuja during a panel discussion titled “Unlocking Nigeria’s Oil Potential: The Push for More Oil,” where he identified investment certainty as a critical factor in financing major energy projects.
According to him, the availability of natural resources alone is insufficient to attract investors, particularly for projects that require substantial upfront funding and take decades to generate returns.
“Certainty itself is the product,” Falade said, explaining that investors need confidence that the conditions governing their investments will remain stable throughout the project lifecycle.
He noted that lenders assess not only the quality of available resources but also the durability of investment policies, the predictability of revenue and the ability of project participants to fulfil their obligations.
Falade cited NLNG’s Train 7 expansion as an example of how a credible investment framework and a strong performance record can help secure financing for capital intensive projects.
The project secured financing in 2020 amid the COVID-19 pandemic, drawing on internally generated cash flows and $3bn in external funding from 31 local and international financial institutions.
He attributed the financing success partly to NLNG’s experience in developing and operating six trains, as well as its repayment of loans previously obtained to fund the facilities.
According to him, the company’s history of delivering projects and meeting its financial commitments strengthened lenders’ confidence in its ability to execute the Train 7 expansion.
“Track record compounds,” Falade said, noting that successful project delivery enhances an organisation’s credibility and can improve the terms on which it secures financing for subsequent developments.
He identified three fundamental questions that lenders and investors consider when assessing major projects: “Who buys the product? Who carries the risk? Who stands behind the project?”
Falade explained that long-term sales and purchase agreements, including contracts lasting up to 20 years, provide a commercial foundation for investments by offering greater visibility into future revenues before a final investment decision is taken.
He added that projects become more attractive to financiers when risks are allocated to the parties best positioned to manage them. While buyers can manage market related risks, operators and contractors are responsible for handling technical risks associated with project delivery.
The NLNG chief also highlighted the importance of operational performance in sustaining investor confidence, disclosing that the company’s plant utilisation had risen to 81 per cent year to date after remaining at approximately 60 per cent for about two years due to feedgas constraints.
He said the improved performance demonstrated the facility’s capacity to operate more effectively when sufficient natural gas is available, reinforcing the relationship between reliable production, predictable earnings and access to financing.
Beyond investment mobilisation, Falade called for deliberate efforts to develop local businesses and technical capabilities capable of supporting future energy projects.
He argued that local participation should be measured not only by the amount of money spent on Nigerian suppliers but also by the skills, expertise and commercial opportunities transferred to domestic businesses.
“Capability has to be deliberately built into what you do,” he said.
As an example, Falade cited the construction of NLNG’s six vessels, during which Nigerian manufacturers supplied materials and products, including furniture and cables.
He explained that some of the local suppliers subsequently maintained commercial relationships with international companies involved in the project, enabling them to access opportunities beyond their original contracts.
According to him, deploying these capabilities in future developments would help Nigerian businesses gain experience, undertake more sophisticated assignments and compete in international markets.
He urged policymakers to strengthen local capacity by creating an enabling business environment that encourages investment, supports enterprise development and allows domestic suppliers to participate more extensively in major projects.
The discussions at the 32nd Nigerian Economic Summit highlighted the importance of stable investment conditions, commercially viable projects and stronger local capabilities in attracting financing and expanding Nigeria’s oil and gas industry.
Falade’s remarks underscored the need for Nigeria to translate its natural resource endowment into bankable projects while ensuring that domestic businesses develop the expertise required to support successive energy investments.
