674 views | Akanimo Sampson | April 18, 2019
In spite of her huge gas reserves, stakeholders say the environment in Nigeria is still not conducive for a gas revolution. They were speaking in Lagos, the country’s commercial capital, at this year’s Business Forum and the 20th Annual General Meeting of the Nigerian Gas Association (NGA).
Currently, the country’s proven gas reserve according to the Nigerian National Petroleum Corporation (NNPC), is up to 202 trillion cubic feet (tcf), while the unproven gas reserves is about 600tcf.
Based on these figures, Nigeria has almost 10 times the gas reserves base of Trinidad and Tobago, and could be in the same league as Iran, Qatar, and Russia.
NNPC Group Managing Director, Maikanti Baru, who made these figures public equally revealed that on the average, Nigeria’s current gas production is in the region of 8.5 billion standard cubic feet per day (bscfd).
He noted that the volume of 3.7bscfd, represents 43 per cent of total gas production was exported, while 2.7bscfd – 32 per cent of total gas production is used upstream for gas re-injection and gas-lift, 1.5bscfd – 18 per cent of total gas production is used domestically for power generation and industries, while the balance of 0.6bscfd representing seven per cent of total gas production is currently being flared at fields in the Niger Delta.
Baru, said the country had significantly increased domestic gas supply and reformed the commercial framework for gas by reviewing the domestic gas price to export parity as well as developed standard gas supply agreements.
According to him, NNPC has equally developed a clear cut strategy for growing gas supply to meet the unprecedented growth in domestic gas demand by completing its short term gas supply projects and increasing supply from its subsidiary – the Nigerian Petroleum Development Company (NPDC) Oredo, Utorogu and Odidi re-entry projects.
Baru was speaking last year at the 11th edition of the Nigerian Gas Association (NGA) international conference and exhibition in Abuja, where he also said upon completion, the projects will deliver about 240 million standard cubic feet of gas per day (mmscfd) to the domestic market by the fourth quarter (Q4) of 2018.
He indicated that the NNPC had made massive investment in the promotion of the usage of cooking gas with the revamp of the eight liquefied petroleum gas (LPG) butanisation plants in Apapa; Ibadan; Oshogbo; Enugu; Ilorin; Gombe; Makurdi and Kano.
‘’Our plan is to connect all the stations through pipelines to bring LPG closer to consumers’’, Baru said, while calling on members of NGA to join forces with the NNPC and other stakeholders to ensure Nigeria’s gas sector is developed, adding that the corporation had executed a novel contract with a private firm for the activation of virtual gas pipeline network for power generation.
The project, he noted will be facilitated with the installation of mini liquefied natural gas (LNG) plants designed to supply, in the first instance, about 84mmscfd of gas from production fields using customised cryogenic tankers to areas that are not easily accessible through pipelines.
While Baru said the supply technique will develop Nigeria’s energy sector and consequently help revitalise the manufacturing, textile and housing sectors with the provision of affordable electricity, the immediate past president of NGA, Dada Thomas, in his remarks highlighted the need for Nigeria to achieve optimisation of its enormous gas resources through constructive engagements with stakeholders across value chain.
But, in his presentation in Lagos, Chairman of the Oil Producers Trade Section (OPTS), Paul McGrath, said the forum was timely and critical toward highlighting measures that enable capturing of the potential benefits of the gas industry.
McGrath said that implementation of these measures would require deliberate and extensive collaborative efforts among the governments and key stakeholders, pointing out that Nigeria is endowed with vast natural gas resources, which could play a leading role in diversifying the economy by stimulating the development of various sectors.
According to him, gas can be used for electricity generation, to provide feedstock for value-adding manufacturing, and to increase governments revenue from Liquefied Natural Gas (LNG) sold in international markets.
McGrath, who is also, the Managing Director, ExxonMobil, said that the country gas provides a unique opportunity to provide steady, widely-available, cost-effective and generally affordable power to everyone, adding that a shift to gas-fueled power generation would represent significant saving opportunities over sources such as diesel, which was multiple times more expensive than gas at the current price of 2.5 million dollars British thermal unit mmbtu.
He said this saving could be redeployed by power consumers (individuals and businesses) to other goods and services and to new investments. ‘’Additional opportunity exists in leveraging gas to develop industries that use gas as feedstock to produce methanol and ammonia used in fertilizer production.
‘’The Nigerian agricultural sector, the largest GDP contributor to our economy, will benefit immensely from greater availability of fertilizer. Considering the low nitrate concentration in our soil and gas being the key feedstock for nitrate-based fertilizer, developing the gas industry can contribute to enhancing food security’’, the ExxonMobil boss said.
While claiming that the Nigeria Liquefied Natural Gas (NLNG) maintains 70-80 thousand jobs in the economy and contributes 1.3 billion dollars each year in revenue to government, the OPTS chairman added that NLNG also provides the much needed revenue for the government to deploy for the benefit of Nigeria, such as development of infrastructure and diversifying the economy.
On challenges and solutions to unlock Nigeria’s gas potential, he said that to realise the full benefits of gas as a catalyst for economic growth and diversification, several challenges across the entire gas value chain needed to be resolved, and listed the challenges to include inadequate infrastructure along the value chain; regulated low prices; legacy debts related to gas and power supply, and the challenging business environment.
‘’It is no longer news that infrastructure along the gas and power value chain remains inadequate. Nigeria lacks sufficient pipelines to deliver gas from the fields where it is produced to the current and potential off-takers (e.g. power plants, manufacturers). In addition, the transmission and distribution systems lack the capacity to deliver the generated electricity to businesses and other consumers.
‘’Building infrastructure requires a sustained joint effort of the stakeholders led by government. Active government support will help to enable a stable investment climate, acceptable commercial terms and contractual risks. The above elements will help in attracting the required private investments which would strengthen existing off-takers and ultimately lead to emergence of new buyers and suppliers’’, McGrath advised.
In her submission, the Deputy General Manager, Gas Commercial, Total Exploration and Production, Mrs Maryam Shehu, said that gas has good credentials as clean energy, pointing out that government has not positively responded to dealing with critical issues inhibiting investment in the sector.
While also describing gas pricing regime as a major factor discouraging private investment in the midstream sector, the Managing Director of OilServe, Emeka Okwuosa, said that infrastructure gap was limiting impact of gas as enabler to industrialisation.
Okwuosa harped that efforts should be made to push volume of gas to support power generation to spur industrial growth and development.