One quick and effective way for the Federal Government under the watch of President Muhammadu Buhari to encourage investment, make the local industry competitive and generate jobs on a large scale, would be to resolve the protocols and politics cramping the production and delivery of gas, stakeholders say.
Meanwhile, the gas supply crisis threatens to upend the landmark privatisation of Nigeria’s electricity industry, prolonging the pains of millions who expected that years into the process, electricity supply ought to have improved significantly.
Industry stakeholders say the problems in the sector include the fact that the Ministry of Petroleum Resources controls gas prices by regulation and that the Nigerian Gas Company, a subsidiary of the Nigerian National Petroleum Corporation (NNPC), owns the largest network of gas transport pipelines in the country.
This, they say, has thrown a spanner in the works of the privatisation process and faults the wisdom that government has no business in business.
They point out that power outages across the country have been constant, debilitating for households, excruciating for businesses that suffer rising production costs, falling productivity, lower revenues, leading to staff lay-offs.
The stakeholders emphasise that with gas available in the required volume to drive generation of power and other gas-based industries, the economic growth and development which Nigeria yearns for would be accelerated.
Seye Fadahunsi ,executive director, Pillar Oil, speaking to BusinessDay, said the easiest way to hasten power generation is through gas.
Fadahunsi said gas development would lead to the construction of a series of pipelines which would deliver the product to gas-based industries across the nation.
He observed that if this was done, fertilizer companies, as well as ammonia, petrochemical companies and other industrial concerns which utilise gas , would thrive.
For Nigeria to achieve her economic goals, he said, the country must focus on accelerated development of gas-to-power initiatives.
He further oberved that Nigeria has some of the best gas reservoirs in the world, and that what it needs is the technology and skilled hands to manage them.
Eddy Wikina, managing director, Treasure Energy Resources, also commenting, said the reason government should focus on gas is that it would deliver cheaper power to the country than petrol or diesel, in addition to being environment-friendly.
Investing in gas and paying less attention to crude oil production, he said, would reduce the rate of pipeline vandalism because the vandals do not have the wherewithal to harness or deploy gas, as they do with crude.
Wikina, who is also a former official of Shell Nigeria Exploration and Production (SNEPCO)said efforts should be concentrated on building smaller power plants along the route of gas pipelines.
“Government should invest in gas but the infrastructure is not there. But it is possible and do-able”, he said.
Rolake Akinkugbe – vice president and head, Energy and Natural Resources, in First Bank Nigeria, who spoke at the Petroleum Technology Association of Nigeria (PETAN) forum on “Global Gas Outlook and its implications for Nigeria”at the recently concluded Offshore Technology Conference (OTC) in Houston ,Texas , USA, said the country’s domestic gas demand is projected to hit eight billion standard cubic feet per day, from the current two billion standard cubic feet per day, by 2020.
Akinkugbe disclosed that the gas-fired power plants in the country require huge volumes of gas every day, which they are currently not getting. She added that at least $20billion is required for gas infrastructure development .
She further observed that the regulatory environment needed to keep pace with the demand for gas and evolving global industry trends.
One of the major challenges for making gas readily available to service domestic requirements in the short-term, would be the growing demand from Asia, as the top three consumers from that continent will require 14.4 trillion (TCF) in 2020, and this still provides a market for many of Africa’s exporters , including Nigeria.
In 2012, the US did not import any LNG from Nigeria, though imports resumed in 2013.
Akinkugbe also spoke about the high cost of producing gas. Gas, she said, is unlikely to compete with petrol in the short-to-medium term, despite cost and environmental benefits because the cost of developing and extracting, transporting and distributing gas is tremendous.
She observed that in the area of regulation and policy, price distortions undermine gas products advantage over oil, particularly downstream, adding that this has different implications for producers and consumers.
Aside from infrastructure bottlenecks which limit producers’ options, policy options that favour more informed switch to gas-driven technologies are limited, she said.
Olusola Bello
