• Monday, July 15, 2024
businessday logo

BusinessDay

2020: Nigeria’s promising start to a decade of gas

NLNG Train 7 project

As 2020 comes to an end, reviewing key events and happenings of the outgoing year shows it has been an unprecedented one for Nigeria’s gas sector given the challenges occasioned by the COVID-19 pandemic.

The year kicked off with a strategic christening of it as ’the Year of Gas’ by the Minister of State for Petroleum Resources, Chief Timipre Sylva. The Nigerian International Petroleum Summit in January foreshadowed the progress that was to come in the sector with robust discussions on increasing the role of local players in the sector and attracting investments in the gas sector.

In terms of projects, the Ajaokuta- Kaduna- Kano (AKK) pipeline project, a 614km-long natural gas pipeline currently being developed by the Nigerian National Petroleum Corporation (NNPC) stands out as the flagship project of the year.

The project forms a section of the Trans-Nigeria Gas Pipeline (TNGP) and has the capacity to transport about 2.2billion cubic feet of gas when completed. The construction of the pipeline is buoyed by the launch of the Nigerian Gas Transportation Network Code (NGTNC), which is a vital step in ensuring transparency for the transportation of gas in Nigeria.

The year 2020 also witnessed commendable private sector-led gas distribution and infrastructure projects necessary for improving gas supply across the country. These projects include the expansion of the gas distribution network in Ikorodu by Falcon Corporation Limited, the development of the Sagamu Gas Distribution Zone by Transit Gas Nigeria Limited, a subsidiary of Axxela Limited, the 20km gas pipeline recently completed by Shell Nigeria Gas (SNG) to take gas to commercial and industrial hubs in Aba, the gas distribution facility to connect the 55MW Ossiomo IPP and other industrial clusters in Edo state by QSL Gas & Power Ltd and the Nigerian Gas Marketing Company (NGMC) amongst others.

Agreements were also signed for the development of other projects such as the gas distribution facility being developed by SNG in partnership with the Nigerian Content Development Monitoring Board (NCDMB) in Polaku, Bayelsa State and the signing of an MOU for development of gas distribution infrastructure to Ibadan axis by SNG.

Another key project just recently commissioned is the 200 mmscf/d Integrated Gas Handling Facility (IGHF) and Liquefied Petroleum Gas (LPG) Storage Dispensing Unit wholly owned and constructed by the Nigerian Petroleum Development Company (NPDC) in Ologbo, Edo State. These in addition to the bulk storage LPG depots built by Rainoil and Techno oil respectively, provides the critical infrastructure required to increased and deepen our LPG penetration in the country.

The NLNG Train 7 project, which had a Final Investment Decision (FID) taken in December 2019, continues to make progress with the execution of the Engineering, Procurement and Commissioning (EPC) contract to the Saipem Chiyoda Daewoo Joint Venture (SCD JV).

LNG production from the train is expected to commence in 2024, positioning Nigeria as a leading LNG producer and exporter.

Other on-going projects include the Ob/Ob – Oben (OB3) pipeline required to unlock huge gas resources in the eastern part of the country and connect to demand centres in other parts of the country, the ANOH gas processing facilities being built by Seplat/NGC JV and SPDC JV to make available up to 600 mmscf/d of gas volumes to the domestic market and the Dangote Fertilizer plant, a Gas Based Industry using gas as feedstock to produce fertilizer and reduce our dependency on imports.

These projects are a testament to the investment opportunities that abound in the gas sector and industry stakeholders hope to see a continuation of this confidence by the private sector in replicating the build-out of such critical gas infrastructure and developing necessary gas-based industries in other parts of the country in 2021.

Policy advocacy and reform have been another major highlight of the year with industry experts and regulators engaging in extensive dialogue on pressing issues tied to the success of the sector.

Gas pricing has been a longstanding concern with calls for a review of current policies and practices to attract investment in the gas sector. In response to these concerns, a committee charged with evaluating and reviewing the price of gas in the country was inaugurated by the Minister of State for Petroleum Resources this year. Chaired by Engr. Yusuf Usman, Chief Operating Officer Gas and Power, Nigerian National Petroleum Corporation, the committee continues to reach across professional and industry lines in their bid to execute a gas sector-wide review of the domestic gas pricing framework that puts the interests and benefits of all parties into consideration.

The current Petroleum Industry Bill before the 9th National Assembly also recognizes the distinct nature of gas as separate from oil and proposes the establishment of a midstream gas infrastructure fund

To effectively promote gas utilization and deepen the domestic use of gas, The National Gas Expansion Programme (NGEP) was also launched this year.

It’s driving mandate being the creation of frameworks for the utilization of Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG) as clean alternative sources of domestic energy in Nigeria.

A key component of the NGEP’s activities has been the sustained push for the adoption of autogas as the preferred option for automobiles and other prime movers.

With Nigeria’s autogas scheme officially launched on the 1st of December, 2020 by President Muhammadu Buhari, we can expect to see increased gas activity in the transportation sector with government-funded conversions incentivising vehicle owners to make the switch to gas.

To support the NGEP, the CBN came up with the N250billion gas intervention facility, the largest ever gas sector fund to stimulate private investments in the gas value chain.

Whatever 2021 holds in store, industry players believe it is clear that the dynamism and drive that has propelled the gas sector is set to continue given the Federal Government’s declaration of Jan. 1, 2021, to Dec. 31, 2030, as “The Decade of Gas Development for Nigeria,” a declaration made by Timipre Sylva, Minister of State for Petroleum Resources, at the Seventh (Virtual) Joint International Energy Forum and International Gas Union (IEF-IGU) Ministerial Gas Forum in Malaysia is a commitment to promoting long-term investments and making gas a priority in the nation’s economic policy.

According to Oga Adejo-Ogiri, Executive Secretary of the Association of Local Distributors of Gas, the next decade provides Nigeria one last opportunity to harness its abundant gas resources for the country’s overall development because of the energy transition and the global switch towards greener forms of energy.

He stated that gas is the only fossil fuel forecasted to increase its share of the global energy mix within the next 20 years and charged the policymakers to do all that is necessary for creating the enabling environment to attract further investments required to make 2021 – 2030 a decade of Gas for Nigeria.

According to industry analysts, the next decade will be pivotal for the global development of gas, as there have been consistent calls for a shift in financing from fossil fuel exploration and development to renewable energy projects.

This trend, according to them, is a threat

to negatively impact the growth of the gas sector. Nigeria must therefore lead efforts to affirm the place of gas as a transition fuel and an effective buffer, given its unique quality as the fossil fuel with the lowest carbon footprint, as we progressively head to a future where clean energy is the norm across developed and developing countries, the analysts suggested.

The next decade will undoubtedly be a test of our commitment to market leadership as well as policy and infrastructure development, Lagos-based energy analysts said.

According to him, with the strides made so far, industry players are undoubtedly optimistic about the promising start to a decade of Gas for Nigeria.