Unchaining Nigeria’s gas potentials of over 202Tcf of discovered natural gas reserves worth $462.5 billion will require collaboration between the Federal Government and private sector, Gas experts and stakeholders have said.
The private sector has the ability to innovate, capacity for domestic gas market and willingness to make long-term commitments, they point out.
For this to happen, there are several challenges relevant stakeholders must overcome in order to successfully develop growth projects in natural gas fields that are yet to be fully tapped.
In the past, the entire laws and policies within the Nigerian petroleum sector were technically skewed in favour of oil, causing an unhealthy attention to it and neglect of gas resource. This is a narration that is beginning to change however, although relics of the old regime can still be seen.
Ademuyiwa Adegun, an Abuja-based gas commercial advisor said the government should realise that it does not have to be a player in the gas sector.
“Until government understands that it needs to be more of an enabler than a player, we will not move forward,” Adegun told BusinessDay.
Charles Akinbobola, energy analyst at a Lagos-based energy firm Sofidam Capital, said the government needed to make sure there is ease in attracting capital and also resolve the issues surrounding regulation which deals with ease of entry, ability to set up and licenses.
Other stakeholders believe the government sector have to be bold about solving challenges such as gas pricing, unreliable gas supply, poor gas infrastructure, power sector liquidity issue, ineffective regulation of the energy value chain, and concentration and control of gas resources within a limited set of license holders in the country.
Bolaji Ogundare, an investor who runs NewCross Exploration and Production Limited, an indigenous oil and gas firm, said the bigger challenge he and his peers worry about when dealing with government was the issue of multiple taxations.
“These are things that scare investors because there is no clarity of purpose, unlike other countries that are creating a more enabling environment,” Ogundare said.
On the part of the private sector, Adeoluwa Eweje, an International Energy Solution Consultant, said private investors need to spread investments along the gas value chain, for example creating a more robust pipeline network to improve reliability and security of supply.
Bolaji Osunsanya, president of Nigeria Gas Association (NGA), told journalists at a conference that Nigeria’s gas sector had over $55 billion worth of investment opportunities, thus indicating great potentials for growth in the economy and in key areas such as exploration and production, processing, supply, and distribution.
“Turning natural gas into a profit-making venture would require huge investments in infrastructure to address the five component areas of gas availability, gas affordability, deliverability, funding, and legal and regulatory framework,” Osunsanya said.
Industry sources say there are lots of investment opportunities in Nigeria’s gas sector ranging from gas processing plants, fertilizers and petro-chemicals, gas terminals, export-oriented projects, storage for LPG, gas flaring, and the virtual pipeline space.
Layi Fatona, managing director of ND Western Limited, a private company with operations in Niger Delta said his company was the first in eliminating gas flaring from daily production.
“The gas plant can process all the associated and non-associated gas that we produce and put in a pipeline that goes to Bonny LNLG. Today, we are the only indigenous company that is delivering gas to Bonny LNLG,” Fatona told BusinessDay.
Ademola Luqman, a gas expert with a Lagos-based advisory firm said although the government has to do more in creating an enabling however there is need for more collaboration between the private and public sectors in order to maximize Nigeria’s gas potentials just like Mozambique.
Despite struggles in full utilization of Nigeria’s gas reserves some big-ticket projects are emerging in the country, thanks to collaboration between private sector and government.
Seplat Petroleum’s planned $700million gas joint venture with the state-owned Nigeria Gas Company in Imo state is emblematic of what the government would like to happen more often – a high-impact project run by a home-grown company.
The project, called Assa North-Ohaji South plant, will process wet gas from Niger Delta crude-producing blocks 21 and 53. It is slated to have a capacity of 300mn cubic feet a day (f3/d) with the first supply due in 2021.
The Assa North-Ohaji South is one of seven gas projects identified by the government in 2018 as critical to overcome a looming supply gap. They have been fast-tracked to provide 3.4bn ft3/d of gas to provide feedstock for 15 gigawatts (GW) of generation.
Shell Petroleum Development Company (SPDC) stated in June that it had increased its gas distribution capacity by over 150 percent following the completion of its second gas train, the Agbara-Ota Capacity Increase Project in Ogun State. The company stated its expansion projects in various states would add more than 1GW of power to industrial parks and companies.
Also, success in the export market demonstrates that gas production can be ramped up. Given a dependable customer base and a helpful operating environment there is no reason this cannot be replicated for the domestic market.
Front-end engineering and design contracts were awarded in 2018 for a seventh train at the Nigeria Liquefied Natural Gas (NLNG) project on Bonny Island, which would add up to 8mn tonnes a year (t/yr) of LNG capacity to the existing 22mn t/yr.
NLNG and the Nigerian Content Development Monitoring Board (NCMB) had in March 2019, signed a content plan for the project agreement. NLNG’s managing director Tony Attah said to local media in late June that he expected the FID on the seventh train, which has been discussed for years, to be taken in October 2019.
Over the years, successive governments have made efforts to transit domestic gas pricing to a market-led regime as evidenced by the Natural Gas Strategy, 2003; Natural Gas Policy, 2004; Draft Natural Gas (Fiscal Reform) Act, 2005, also known as Draft Downstream Gas Act; Gas Master Plan, 2008; and most recently the National Gas Policy, 2017, which articulates the pricing philosophy to be adopted in the domestic market.
DIPO OLADEHINDE
