Government may re-route $3billion Ajaokuta – Abuja – Kano gas pipeline

The extension of the $3billion Ajaokuta – Abuja – kano gas pipeline scheduled to be undertaken by the Nigerian National Petroleum Corporation (NNPC) might by shelved, as industry sources say there is a new thinking in government circles, which favours an alternative pipeline to Kano.
The gas pipeline is planned to supply gas for both power generation and industrial uses along the northern axis. Already, gas supply which comes from Oben gas field in Edo State, stops at Ajaokuta in Kogi State.
BusinessDay investigations reveal that government, through the NNPC, may be revisiting the gas discovery in the Bauchi trough, which made several years ago, by Shell Nigeria Exploration and Production Company ( SNEPCO).
Industry sources told BusinessDay that by the first quarter of next year, government may likely announce a major gas discovery in the Upper Benue Trough, around the Gombe International Airport. They said some of the wells already drilled by SNEPCO would be redrilled and announced as new discoveries.
Our sources further said if this venture is successful, especially if it is commercially viable, there would be no need for the Abuja – Kano gas pipeline, for which the cost would be higher than the one going to kano from Bauchi.
Again, security of gas supply from the Bauchi Trough would be reliable and not subject to regional agitators who bear arms and sabotage critical infrastructure, in this case, gas supply coming from the Niger Delta.
Following this development, the sources said, the NNPC might have to shelve the Abuja-Kano gas pipeline .
Already, the gas pipeline projects has generated a lot of interest among stakeholders who argue that the project is no longer economically viable and that government should concentrate on encouraging the people of northern Nigeria to use more of Liquefied Natural Gas (LPG) otherwise known as cooking gas, now ,so as to check the felling of trees for firewood, which is causing deforestation.

Dan Kunle a former senior official of the Bureau for Public Enterprises, said if the Ajaokuta – Abuja – Kano project was viable 10 years ago, it is no longer viable now because of the level of uncertainty in the country.
Kunle asked how much gas is getting to Ajaokuta currently, to warrant extending the gas pipeline to Kano, when the country find herself in a terrible economic situation now.
According to him, when the project was first proposed, two upstream assets were attached to it, but the efforts of the company that was to construct the pipeline were frustrated by governments, after the regime of Olusegun Obasanjo
Besides, other stakeholders are asking who is going to guaranty the gas purchase agreement for the project, what fiscal framework is going to guide the project and which contractor would be ready to stake its money on the projects.
What is going to be the price regime for the gas and rate of return on investment? These are some of the knotty questions being asked by stakeholders.
Felix Ekundayo of Gas Terminally Company, however said that even if the Ajaokuta- Abuja – Kano project cannot kick-off now, LPG can be used for the time being, pending when the country can be economically strong enough to undertake such a big project, as the Ajaokuta- Abuja- Kano gas pipeline .
“Currently, LPG is used to generate power and for so many other things. Using LPG before the natural gas gets to the northern part of the country could help to prepare the market, so that when the natural gas eventually gets there, those companies that need it would readily key into it.

 

Olusola Bello