Declining oil fortunes, FG urged to look towards gas

Experts are urging the Federal government to focus more on strategies to monetise gas which is a strong catalyst for growth and multiplier effect on the economy.

 According to a report by the International Gas Union (IGU), total Liquefied Natural Gas (LNG) trade in 2015 reached 244.8MT, up 4.7MT from 2014 and the largest year ever for the trade, even surpassing previous high of 241.5MT achieved in 2011.

 “Natural gas accounts for roughly a quarter of global energy demand, of which 9.8% is supplied as LNG. The 2016 IGU World LNG Report shows that major expansions of LNG supply through 2020 positions LNG to further increase its market share,” said David Carroll, President of the IGU.

 With six trains currently operational, the entire Nigeria LNG complex is capable of producing 22 million tonnes per annum (mtpa) of LNG, and 5 mtpa of NGLs (Liquefied Petroleum Gas [LPG] and Condensate) from 3.5 Billion (standard) cubic feet per day (Bcf/d) of natural gas intake.

 Geologists claim even this is far lower than Nigeria’s capacity where gas reserves are potentially up to 600TCF, if companies deliberately explore for gas, as opposed to finding it while searching for oil.

 Between 1999 and 2013, NLNG has converted 133BCM (Billion standard cubic meters) or 4.68TCF of Associated Gas (AG) to export products (equivalent to more than 1630 LNG and NGL cargoes) which otherwise would have been flared.

  Babs Omotowa, NLNG managing director said that between 1999 and 2014, Nigeria received $24billion in revenue and dividends from its operations in Bonny Island. $13 billion of the amount was earned as dividend for Nigeria while $11 billion was raked in from sale of feed gas. Last year, Nigeria earned about $3.2 billion from its LNG operations

 In recent times, Nigeria’s crude oil earnings have been facing sharp declines and investments in crude oil exploration have plummeted. .

 “There has not been any significant investment in Nigeria’s oil exploration in the past ten years. We are fast depleting our oil reserves and are not trying to explore new fields,” said Isreal Aye, oil and gas consultant and Managing Partner, SterlingPartnership.

 In 2014 when oil prices hovered above $100 per barrels, Nigeria raked in $88 billion while revenues fell sharply by $36 billion according to an International Monetary Fund calculation.

Industry watchers say revenues will fall further in 2016 as oil prices have dipped below $50 and Nigeria’s output have seen over 800,000 per day loss due to renewed militancy.

 “The problem with Nigeria’s engagement with oil is that it is not engaging fully with the entire value chain,” says Dauda Garuba, Nigerian officer for Natural Resource Governance Institute (NGRI). “No nation ever succeeds by exporting crude oil without adding value. Nigeria should focus on gas because it has more opportunity to add value,”

According to Nigerian National Petroleum Corporation (NNPC) the country lost $518million last year due to gas flares of 271.38 billion standard cubic feet of gas flares at the current gas price of $1.91 per 1,000 standard cubic feet.

Emeka Ene, chairman, Society of Petroleum Engineering (SPE), Nigeria Council said there is need to identify and secure Nigeria’s closest markets and develop an integrated flare-out model.

He said government should implement the pipeline network code, fast track captive power and inaugurate gas powered public transportation to ensure accelerating stranded flare gas monetisation..

“Private sector people respond well to incentives rather than penalties, hence to monetise gas, NigeriaN government should provide incentives and get out of the way of business people,” said Yomi Fawehinmi, in a training session for journalists at Pan Atlantic University, Lagos.

Isreal Aye, further said, “We need gas for increased power generation as most of Nigeria’s power plants are gas fired plants. Gas can also serve us more as fertiliser as most of our land is undernourished. Gas for cooking is also essential.”

Analysts say Nigeria has some of the lowest penetration of domestic gas consumption. Nigeria is ranked lowest in sub-Saharan Africa in per capita usage of LPG, consuming 1.1kg compared with Ghana at 3.0kg; South Africa consumes 5.5kg; while Morocco consumes 44kg per capita.