With the uncertainty trailing oil exports and revenue due to the lingering impact of the coronavirus pandemic, PricewaterhouseCoopers (PwC) has estimated Nigeria can rake in $18.3 billion yearly through domestic utilisation of proven gas reserves.
Unlocking Nigeria’s gas potentials of over 202Tcf of discovered natural gas reserves or converting from being an oil economy to a gas economy will require the right regulations, collaboration between the Federal Government and private sector that has the ability to innovate, capacity for domestic gas market and willingness to make long-term commitments.
The total value of Nigeria’s proven gas reserves is over $460 billion, more than the country’s GDP as of today. Yet, in a world where gas is emerging as the commodity of the future, Nigeria lags due to its inability to articulate a vision for energy security around gas.
PwC estimates that economic activities stimulated by the domestic utilisation of Nigeria’s recoverable proven gas reserves have the potential to generate $18.3 billion yearly to the domestic economy through direct economic value addition of $10.5 billion, indirect value addition of $3.4 billion and induced value addition of $4.4 billion.
“This is in comparison to generating an annual export value of $7 billion; harnessing the country’s proven reserves for domestic utilisation can also support 6.5 million full time equivalent jobs yearly,” PwC said in its latest report.
Nigeria holds Africa’s largest gas reserves of more than 202 trillion cubic feet, but flares, or burns, most of the gas it produces along with oil because it lacks the infrastructure to process it.
Much is also lost to the Nigerian economy from the lack of gas to power domestic industries due to investment shortfalls and opaque prices for the gas that manages to get to international markets.
Apart from commitment to the implementation of the national gas policy, PwC advised that efforts should be doubled towards ensuring that the long-term action plans enshrined in the policy document are achieved in order to solve some of the perennial challenges.
It noted that the National Assembly should expedite action on providing legislative backing for the national gas policy document, particularly the provision seeking to separate the Nigerian Gas Company Limited from Nigerian National Petroleum Corporation (NNPC).
“This will ensure greater coherence and efficiency in coordinating industry players in the gas value chain,” PwC said.
PwC noted that proper gas pricing methodologies that consider the current and future dynamics of the gas market as enshrined in the national gas policy must be vigorously executed to optimise benefits from gas across the value chain.
It explained that the government must put in place measures that would shield gas players in Nigeria from the adverse shock to the sector caused by COVID-19 while gas infrastructure should be rehabilitated through concessions (Public Private Partnership) and improved to be more automated and equipped with the technology for better monitoring.
Despite having huge gas potentials estimated to rise to 210.8 trillion cubic feet by 2022, Nigeria faces serious energy crisis as power supply remains grossly insufficient to stimulate massive industrial growth.
Nigeria has over 10 thermal power plants with combined installed capacity of over 8,000 megawatts. Yet power generation still hovers around less than MW per day.
“Investment in power transmission infrastructure will enable evacuation of more power and increase gas utilisation for power generation,” PwC said.
Nigeria is conspicuously absent on the top 10 list, despite holding the largest gas reserves in Africa and the ninth largest in the world.
