The 2016 announcement by Nigerian National Petroleum Corporation, (NNPC) that the country will become the regional hub of petrochemical and fertiliser by 2017 no doubt have elicited a lot of opinions from industry close watchers.
Analysts observed that Nigeria with an estimated 188 trillion cubic feet gas reserves have over the years struggled to develop its gas market and to maintain its position as a major player in the global gas business owing to an abnormal gas policy that frustrate investors efforts.
They opine that the regional hub aspiration is laudable, but were quick to point that in the light of the socio -economic issues plaguing the country; Nigeria in order to effectively challenge her competitors for investors in gas based industries, gas policy focus should shift towards accelerated investment in the upstream and gas infrastructure.
Maikanti Baru, group managing director, NNPC in a presentation to the Nigerian Gas Association conference in Abuja last year disclosed that Nigeria would need around $35.4bn to fund activities including gas exploration and production, power plant projects and flare gas commercialisation.
Baru further said that $16bn worth of investment will be needed to support infrastructure projects for the gas sector including central gas processing facilities, liquefied petroleum gas plants and gas transmission services.
He noted that the first effort towards the ambitious plans for the gas sector is a planned 30 square kilometers gas-based industrial park at Ogidigben, in Delta State, known as the Gas Revolution Industry Park (Grid). Adding that the facility will be Africa’s largest purpose built gas park supporting gas based industries.
“Beyond growing gas for the power sector, there has been a strategic positioning of the sector to support massive gas based industrialisation”.
“The intent is to position Nigeria as a regional hub for gas-based industries such as fertilisers, methanol, petrochemicals and central processing facilities,” Baru said.
Industry experts are however worried that the will power to implement considering the economic realities on ground may be a constraint to this. They advocated for public private partnership in growing this infrastructure.
What the Nigerian Gas Master Plan offers
According to the gas master plan document, it aims to create a structure that will enable Nigeria to leverage on the multiplier effect of gas on the economy, consolidate Nigeria’s position in the high value export markets, and manage the gas asset for national energy security. These objectives are to be achieved through focus on four key areas; a short term gas availability that will focus on meeting immediate power sector requirements, jump-start the domestic gas-based industries and more importantly, provide a base load of domestic gas volumes that will underpin a major investment in gas infrastructure.
It is anticipated that this will set the tune for a sustainable commercial framework underpinned by “credible and enforceable gas contracts, and a price regime that is commercially driven and recognises the long term affordability across different buyers.”
This is expected to encourage investment in building a domestic gas infrastructure that will ensure accelerated supply growth in line with demand growth. Part of the plan is also to introduce a gas-based economy in the Niger Delta, to drive a rapid industrialisation and ownership amongst the states and host communities.
Strategic Gas policy option to achieve aspiration
Industry experts have said that the plans by the federal government to make Nigeria the regional petrochemical, fertiliser hub may never see the light of the day unless there is a radical rethink of gas policy.
They observed that Gas sector in Nigeria holds out significant economic potential to Nigeria as plans by federal government through the ministry of petroleum to enhance gas and other derivatives to attract forex would just be a pipe dream without the requisite gas policy implementation.
For Nigeria to become the hub for oil and gas exploration in the West African sub-region, an annual investment worth $20 billion is required to grow the market and make it more competitive, says Amy Jadesimi, managing director of Lagos Deep Offshore Logistics base (LADOL)
Jadesimi said the industry is targeting 10 million standard cubic foot (SCF) of gas per day adding that with this huge market potential, Nigeria should naturally be the most attractive oil and gas investment destination in the world.
Listing the hurdles that must be overcome, she said that “there is need to end the long contracting cycle, the foreign controlled private monopoly strangling the industry and encourage greater collaboration among Nigerians in the public and private sectors.
Industry watchers are however concerned that the inadequacy of the existing gas processing, transmission and distribution infrastructure to support the current demand, may slow that process of growth suggesting that the managers of the economy must as a matter of urgency streamline the adoption of a national Gas Infrastructure Blueprint that seeks to address the need for rapid deployment of gas infrastructure across the country.
Dada Thomas, managing director, Frontier Oil Limited observes that the pricing structure and the nature of contracts remain a significant obstacle to the development of natural gas in Nigeria, saying that there is a need for a standardisation and harmonisation of the agreements.
Nigeria with her huge natural gas reserve stands to benefits from increased capacity production, industry watchers insists saying that natural gas has the potential to engender rapid positive growth and enormous impact in the overall economy of our nation.
They maintain that while it is not difficult to decipher that ultilisation of gas has assumed a new dimension for both economic and technological development stressing that achieving the desire result in gas supply or the lack of it will remain a very sensitive issue with government involvement in unrealistic prices.
KELECHI EWUZIE
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