Update1: FG approves new gas policy

A new dawn to allow for the effective utilisation of the nation’s gas resources and boost power generation has been opened with the Federal Executive Council (FEC) chaired by Acting President Yemi Osinbajo, approving the new gas policy for Nigeria.

“Clear enough, Nigeria is more of a gas country than an oil country. But what are we doing to ensure our dramatic movement into gas production? I am just coming from the FEC, where we presented a memo on gas, which has been approved today”, said Ibe Kachikwu, Minister of State for Petroleum Resources, in Abuja yesterday.
Kachikwu, who was speaking at the fifth Triennal Delegates Conference of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) expressed optimism that the country’s gas potential could transform the power sector and open a new vista for the oil and gas industry.
The new gas policy is targeted at promoting a public and private sector partnership for an orderly and speedy commercialisation of the nation’s gas reserves, and contribute to the development and diversification of the domestic economy.
To achieve the feat, Kachikwu stressed the need to expeditiously address the huge infrastructural deficit across board, including downstream and upstream, as well as the oil and gas sector.
“The absence of infrastructure has made it impossible to have a holistic private sector participation. We have got to find policies that will encourage private sector participants to play a key role. Coupled with that, is the fact that countries are moving away from oil. Our oil estimate as per reserve, is at best, about 25 to 30 years, while gas estimate is over 60 years.
Gas development in Nigeria has been constrained by the absence of clear fiscal terms; gas pricing mechanism; legal and regulatory frameworks; and inadequate financing. Consequently, government introduced a natural gas policy.
Nigeria’s gas reserves are currently estimated at 182 TCF (trillion cubic feet) with a projected growth rate of over 70% by 2025, the nation’s gas sector has been proven to have the potential of being a key player in the emergent global natural gas market.
Unfortunately, even with this huge gas reserve, not much has been accomplished with respect to the effective exploitation and utilisation of this abundant natural gas reserve, some of which are termed ‘stranded,’ whose volume and location are often considered as non-commercial and difficult to exploit.
That notwithstanding, up until now, most of the nation’s natural gas production has been flared or re-injected, to enhance greater crude oil recovery.
Experts say it has become imperative to find ways to exploit and utilise the nation’s natural gas reserves and translate it to the improvement of the nation’s economy.
Lack of a gas policy, which supports appropriate gas pricing has prevented oil and gas companies making adequate investment in gas infrastructure. The policy should enable them harness and convert the natural gases into useful products that will serve the needs of the populace, bring in additional foreign exchange, improve electricity generation and minimise environmental degradation.
“The major movement is in terms of what we need to do in the gas environment because it is so key, that unless we can put the two together, we are not likely to see an improvement in our economy, or see opportunities that most of you are beginning to miss in terms of job creation and employment in the oil sector,” Kachikwu added.
“Gas is the new horizon of opportunity. There is so much happening that needs to happen, that should have happened yesterday. Gas is the future for this country and the place to be and we need to start looking at that. Increasingly, we are seeing very strong local players,” he said.
The minister, who stressed the need for a paradigm shift in the oil and gas industry, observed that price and other emerging challenges are threatening the oil industry world over.
“Let me just share with you what are the emerging trends today. The reality is that the oil industry is changing almost transformatively. Prices have tumbled and have continued to struggle, despite all the work we have done in OPEC to boost it. The reality is that investments are declining at an alarming rate and suddenly, there are new entrants into the industry.
“Also, CEOs are struggling, as to where to put very scarce resources and suddenly, it is just how well you can market your country, reposition your policies in such a way that there are benefits. All of a sudden, investment returns in some of these exploration activities are beginning to get challenges. Only those who are able to look at their technology and new ways of doing business are going to survive the oil industry of tomorrow.
“If you take the annual return of most of the major oil companies, you will see the sort of disequilibrium that’s happening there and those who are beginning to jump in and out of leadership, you realise that expectations are changing. As it concerns Nigeria, we must work inclusively hard to deal with some of the difficulties that we will continue to see in our production platforms.
“Whether it is the militants, which is a key component, or the slow speed of approvals, or whether the fact that our policies are not even as fast as they should be, to catch up with changing times.
“Those of us who have the opportunity to sit in ministerial zones, where we have to influence policies, have got to work extremely hard to help drive the sea of change that is imperative if the sector is to survive. Infrastructural deficit is a key component. We lack infrastructure in the sector, whether it is down-stream or up-stream, or oil and gas,” Kachikwu said.
Speaking on new timelime set to phase-out gas flaring, he said: “I need to see gas flaring eased out within the next three years. I like to see the refineries which are enmeshed in all kinds of confusion, finally kick off.”
Reacting to public outcry on the alleged concession of existing refineries, Kachikwu, who dimisser the report, argued that the Federal Government has not given approval to that effect.
He said: “let me say that there have been attempts and there is no approval to concession refineries or sell refineries. I keep hearing discussions all over the place, especially from people who should know better.
“My drive is to see that those investments go through a transparent process and the announcement that you hear about selection has not happened. They may all be pacesetters in the whole process, but it will go through a transparent process. Nothing that we are trying to do has taken away the management from the NNPC. However, we need to bring in funds and best practices and elevate these institutions to the level where they should work for this country because we are losing money.