NANFeatures/Vol.10/No.252/2016 (Nov. 9)
Making Nigerian gas sector viable
A News Analysis by Yetunde Bada, News Agency of Nigeria (NAN)
The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr Maikanti Baru, recently announced that the government would invest more than 51 billion dollars in gas sector.
At the10th Nigerian Gas Association International Conference and Exhibition in Abuja, he said the investment would be in gas processing, transmission and infrastructural development.
According to him, 35.4 billion dollars will be used to develop power plants, gas exploration, production, fertilizer plants, virtual pipeline and flare gas commercialisation.
He also said 16 billion dollars would be spent on gas transmission pipelines, port infrastructure, real estate development, central processing facilities, pipe milling and fabrication yards, among others.
Baru said the policy would define the boundaries between upstream, midstream and downstream that would open access for midstream assets such as processing facilities, and pipelines, among other projects.
“The growth of the Nigerian Gas Sector is anchored on growing power sector and the gas based industries.
“Nigeria has the ninth world’s reserves in gas with 192 trillion cubic feet and the largest in Africa.
“The country with the largest reserves being Russia then Iran, Qatar, Turkmenistan, Saudi Arabia, U.S., United Arab Emirate, Venezuela, Nigeria and Algeria in that order, he said.
Appraising this initiative, the President of the Nigeria Gas Association, Mr Bolaji Osunsanya, said the association had since begun sustained awareness about the potential of the country’s gas sector.
“The aim of the awareness is to harness gas, much like oil, as a natural resource geared towards the development of the Nigerian economy.
“Discussion on gas supply will be incomplete without talking about the delivery infrastructure; the gathering systems, the processing infrastructure and the distribution pipelines.
“Given our stated objective to be a gas-based industrial nation, it is critical that we develop a robust gas infrastructure network to support this objective.
“The existing 2,500-kilometre domestic gas supply pipelines seem pale when compared to a need of about 12,000-kilometre gas supply pipelines,’’ he said.
He listed pricing, mobilising investment and reserves as areas that needed government intervention to strengthen the sector.
Osunsanya called for aggressive, varied and better coordinated approach to gas-related policy implementation to improve the pace of the development of the sector.
Similarly, the Minister of State for Petroleum, Dr Ibe Kachikwu, said the vision for the sector was to make it a major player in the local and international market led by private sector to stop gas flaring.
He said the government had developed a draft national gas policy which would be made available to stakeholders for consultations.
According to him, gas will no longer be a shadow to oil production but the government will have a policy to regulate frameworks in the industry and make it a viable sector.
“I urge all of you to give it the robust attention that it desires because that would help us craft the final policy.
“The draft gas policy seeks to promote a competitive business environment for both current and new investors.
“It articulates our vision for the sector and it sets policy goals, strategies and implementation plans for our medium to long term targets for gas to market development.
“The attainment of these projects would not only broaden the economy, related industries would also grow out of these projects such that jobs and other benefits would follow.
“The vision for us is to be an attractive gas-based industrial nation, giving primary attention to meeting local gas demands requirements and then developing a significant presence in the international market.
“The priority of government is the utilisation of natural gas for domestic needs with the power sector as the key priority end-user of the sector,’’ he noted.
Kachikwu said most of the investment would be drawn from the private sector, adding that the government would set the requirements and support the investors with appropriate interventions.
“Our policy challenge, therefore, is to develop a policy, institutional, regulatory and fiscal framework that is attractive to the private sector.
“Over the years, there have been a total neglect of this sector; we really have not focused sufficiently on gas production.
“Having regard to the effect of the recession today, let us develop the twin windows of economic earnings in this country.
“We are going to introduce new technical resources, restructuring existing departments and assigning new mandates to the existing departments.
“We will ensure that NNPC and Nigeria Gas Company are legally restrained from acting as barrier to the private sector growth and expansion,’’ he said.
The minister said a simplified licensing regime would be introduced for every activity, including but not limited to constructing and operating gas processing plants, liquefaction plants, gas storage facilities, transportation pipelines, transportation network operations, distribution networks, wholesale gas suppliers and retail trading of gas.
He said that although the current threat to the nation’s security of gas supply from militants and insurgency in the Niger Delta region was critical, the government was addressing it through negotiations.
He also said that the national gas flare commercialisation programmes would begin in the first quarter of 2017.
“We are going to be providing incentives for local consumers through free gas cylinders; we are seeking to exit gas flaring by 2020.
“To achieve this, gas utilisation would be priority consideration over other considerations for handling non-associated gas.
“We would encourage the deployment of technology solutions for the capture and utilisation of associated gas.
“We will be seeking the commercialisation of flared gas for supply to the domestic and we will be increasing the gas flaring penalty,’’ he said.
The theme of the conference was “Nigerian Gas Roadmap and Its Potential for Regional and Global Influence: Its Implementation, Challenges, Opportunities and New Way Forward’’.(NANFeatures)
**If used, please credit the writer as well as News Agency of Nigeria (NAN)