Nigeria is well known as an oil producing and exporting country. Less well known is that it has also the largest reserves of natural gas in Africa. Over the years, countries with abundant gas have enjoyed extraordinary benefits. In the 1960s and 70s it transformed the Dutch and British energy landscapes, becoming the clean, safe fuel of choice in homes, supporting industry and providing fuel to power stations that kept the lights on in homes and offices. In the ‘80s and ‘90s, technology to cool and condense gas to 1/600th of its natural volume – liquefied natural gas or LNG for short – provided countries in the Middle East with an economic way to ship and sell their gas across the world, helping them earn more from their natural resources while supporting global growth. And today, gas continues to transform the fortunes of countries, sometimes in dramatic ways. For example, new techniques to extract gas held in shale rock are helping countries unlock large energy reserves that were previously too expensive. That has given the US the welcome and timely boost of cheaper industrial costs during the recent global economic slowdown and helped spur the re-emergence of America’s manufacturing base.
Given its enormous potential, the Nigerian government has rightly identified development of the gas sector as central to the nation’s future economic development plans. The country began its journey to harness the value and power of natural gas many years ago. I’m proud that Shell – one of the world’s most innovative and competitive gas companies – has partnered with the government every step of the way, blending its global expertise in innovative technologies and shipping with market-leading strategies to commercialise natural gas.
In the 1960s, the Shell Petroleum Development Company of Nigeria (SPDC JV) began supplying gas to industries and power plants at Afam in Rivers State, the first company in the country to do so. Until 1998 it remained the country’s sole gas supplier. Today, the SPDC JV continues to provide over a fifth of the nation’s domestic gas supply. A large percentage of that supply is used to generate the electricity that underpins the economy and many areas of our daily life, from street lighting to television, to schools, hospitals, factories and community halls. In 1998, Shell became the only international oil and gas major to set up a wholly-owned downstream gas sales and local distribution company – Shell Nigeria Gas Limited (SNG) – in the south-western and eastern parts of the country. SNG currently serves over 60 industrial customers including some of the nation’s best known companies (such as Nestle Nigeria Plc, GlaxoSmithKline Consumer Nigeria Plc and Unilever Nigeria Plc) that make products which many of us have at home in our kitchens and bathrooms.
In 1999, the Nigeria Natural Liquefied Gas Company (NLNG) began exporting LNG cargoes from Bonny Terminal, generating very significant revenues for the nation – approximately $9 billion in dividends to date. Shell is a minority shareholder in NLNG and brought the technology in use at Bonny, leading the development of the LNG sector in Nigeria. In 2010, SPDC began producing gas at our new plant at Gbaran Ubie in Bayelsa State. A world-class plant in the heart of the Delta, built by Nigerians, Gbaran Ubie produces over a billion standard cubic feet of gas a day. And as one of the investors in the West African Gas Pipeline, which began exports in 2011, SPDC has helped Nigeria monetise its gas and boost economic development in Ghana, Benin and Togo.
So, although many may not know it, Nigerian gas touches, shapes and enhances many lives on a daily basis in Nigeria, along West Africa and across the world. And there’s far more potential to increase the role and value of natural gas in a way which will benefit all Nigerians. Domestic natural gas can transform the economy and unlock the drive and determination of Nigerians, by feeding the nation’s power plants, boosting the nation’s supply of electricity so vital for economic life. The significant revenue from the export of natural gas also contributes materially to the nation’s economy.
The National Power Roadmap issued by the Federal Government charts a path to get there. It sets out ambitious targets to raise Nigeria’s power generating capacity from 10 to 40 Gigawatts. And in 2011, the government also launched the Gas Revolution agenda which aims to stimulate the creation of world-class petrochemical and fertiliser industries using natural gas as an enabler for job creation to catalyse Nigeria’s economic growth.
Much work needs to be done to achieve both these goals. Nigeria needs an interconnected gas grid so that gas can be delivered from where it is produced to where it is most needed, direct to companies, homes, power plants and export routes. It needs many new gas production facilities and power generating plants. All that requires tens of billions of dollars of investment over the next few years. The draft Petroleum Industry Bill before parliament will set tax rates and investment conditions for the industry for years to come. These will determine whether or not companies can afford to invest the huge amounts required to unlock Nigeria’s full gas potential.
I sincerely hope they do because I have seen with my own eyes how gas and power can change lives for the better. In 2008, I toured communities around Shell’s newly opened Afam VI power plant, the country’s most modern electricity generator powered by gas. SPDC built the plant in response to the government’s appeal and today it supplies about a fifth of Nigeria’s power supply. Through social investment at Afam VI and other projects, SPDC also connected many local communities to the national grid, and it was there that I saw for myself how the partnership between SPDC and the Nigerian government is delivering real value. I saw families using electricity at home for everyday things – to keep food in the fridge, run a fan to cool down in the afternoon heat, and watch television with friends – all using gas and power produced by SPDC and its joint venture partners. Gas is good for Nigeria, good for the economy and good for Nigerians. Shell is in the business of natural gas. In fact, we are world leaders. As a Nigerian, I hope we can partner with the government for many more years to bring the benefits of natural gas to ever more people here in Nigeria.
MUTIU SUNMONU
Sunmonu is managing director of The Shell Petroleum Development Company of Nigeria (SPDC) and country chairman of Shell companies in Nigeria.
