Analysts and industry players are optimistic that the ongoing implementation of the Nigerian Gas Transportation Network Code (NGTNC) will among other benefits strengthen the 5 billion standard cubic feet (scf) domestic gas demand projection for Nigeria, according to BusinessDay investigation.
They say the implementation of the code would provide for investors in gas, the confidence to invest heavily in the sector and enable Nigeria consolidate on the multiplier effect of gas on the economy.
Industry players have in the past say that to achieve 5 billion scf local gas demand projection, the domestic market must be made attractive to investors who need to invest huge capital upfront in gas processing and pipeline for distribution, which they believe the NGTNC will effectively handle.
According to the analysts, the decision to implement gas network code under the direction of DPR is a significant milestone in the development of Nigeria’s gas for the domestic and international markets, as it is expected to substantially boost the reputation of the nation’s gas market, attracting increased foreign and local investments to the sector.
Mordecai Ladan, director of Department of Petroleum Resources (DPR), while speaking at a recent oil and gas award event in Lagos organised by BusinessDay, said all was set for the implementation of the NGTNC, stressing that Nigeria cannot do any gas business without solving transportation problem, which the gas network code would address.
Statistics indicate that Nigeria remains very strong in terms of gas production, as production has not drop by any significant margin since the global crude oil price drop started.
Recent figures show that Nigeria currently produces 7 billion scf per day, and 43 percent of production is either re-injected or flared without any commercial benefit, another 43 percent is exported via NLNG, WAGP, etc. Only 13.3 percent is consumed locally of which 8.9 percent is allocated to gas-to-power.
Nigeria is endowed with abundant gas resources and the sector holds huge potentials for unprecedented growth, Kareem Jubril Adedayo, an energy expert with Ecobank, observes.
Adedayo however says that the existing legal and regulatory framework, written primarily for oil, does not provide robust technical and commercial framework for gas.
He is optimistic that the quantum value gain from the combine price increase and the demand from the power and industrial sector will outstrip LNG, which will remain constrained by new supplies into the global market from unconvential gas.
“The solution to this is simple and not in any way complicated, a local gas market without government interference in pricing will definitely be attractive to investors,” he says.
Analysts further maintain that as an enabler, the gas network code will entrench transparency, efficiency, fairness and non-discriminatory access to gas transportation networks.
Available information shows that the establishment of the national gas transportation network code was informed by the Federal Government’s desire to regulate and control the operations of gas pipelines.
Government had reasoned that successful transportation of gas for power generation and other domestic use required a set of rules setting forth the quantity and quality of gas, which international oil companies would input into the pipeline as well as the quantity and quality of gas to be utilised by users, including power plants.
Ladan was reported to have said that apart from the ongoing implementation of the Code, other ongoing government reforms in the industry had high prospects that could boost investors’ confidence in the country’s gas sector.
This could provide a radical structure that will enable Nigeria consolidate on the multiplier effect of gas on her economy, strengthen her standing in the high value export and domestic markets as well as manage her gas resources for national energy security, Ladan said.
