• Thursday, May 30, 2024
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BusinessDay

At 60, Nigeria ready to capture opportunities in domestic gas

Nigeria’s gas

Imagine a Nigeria where automobiles produce no smoke, rural dwellers cook with gas, farmlands yield five times more per hectare and factories run on clean, cheaper and secured energy resource – gas.

Achieving this pleasant future requires a domestic economy powered by gas for transport, cooking, agriculture, and industrial uses.

Despite its vast natural gas reserves Nigeria has been unable, in the past six decades, to latch on to the opportunities inherent in the commodity to drive sustainable economic development.

Nigeria has about 202 trillion cubic feet (Tcf) of proven gas reserves, from around 187Tcf late last year, valued at over $460 billion and about 600Tcf of unproven gas reserves but only about 25 percent of those reserves are under development, according to Shell.

Existing institutional, legal, regulatory, commercial and infrastructural frameworks have limited domestic gas utilisation and kept investment inflows into the sector low. From the Petroleum Act of 1969, Nigeria has evolved gas centred regulations and policy documents, such as the Gas Master Plan of 2008 and the National Gas Policy of 2017.

Early signs of a quiet gas revolution

In January, the ministry of Petroleum Resources inaugurated the National Gas Expansion Programme (NGEP), and some early signs show that Nigeria may be heading towards a gas revolution, if all goes as planned.

Among the early steps to deepen domestic gas use, create jobs and stimulate a gas-enabled economic development is the autogas initiative. As from October 1, the ministry plans to roll out liquefied petroleum gas (LPG), compressed natural gas (CNG) and liquefied natural gas (LNG) for automobiles.

According to Justice Derefaka, technical adviser on Gas Business and Policy Implementation to the minister of state for Petroleum Resources, the rollout would be collocated at the Nigerian National Petroleum Corporation’s 46 refuelling stations to demonstrate the government’s commitment.

The second phase would target over 600 NNPC’s lease and affiliate refueling stations. This is in collaboration with Major Oil Marketing Association of Nigeria (MOMAN), Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), and the National Union of Road Transport Workers (NURTW). The Department of Petroleum Resources has also given 9, 000 refueling stations green light to upgrade and dispense gas.

One million conversion kits are already available according to Derefaka. There would be a value-added tax exemption for everything downstream for the domestic gas utilisation.

The ministry says it is engaging large fleet owners, Nigerian Governors’ Forum, local governments, conversion companies and dispensing facility owners to collaborate in the conversion and establishment of refuelling facilities nationwide, leveraging already existing pipelines and mother stations to reduce the burden of conversion on consumers, which is a major impediment to autogas development.

Abner Ishaku, technical adviser on downstream to the deputy minister who also oversees CNG initiative, said the NGEP had organised a series of engagement with major stakeholders in addition to those already mentioned to include Auto Mobile Assemblers, Nigeria Railway Corporation, to discuss the use of CNG as an alternative fuel for Nigerians.

The ministry also says it is engaging with the Manufacturers Association of Nigeria and the Nigerian Labour Congress on the development of Nigerian Gas-based industries from textile manufacturing to the production of polymer resins.

Under the NGEP, local production of composite resins has been initiated (at the Indorama/Eleme Petrochemicals) to guarantee 100 percent availability of local raw materials for the production of LNG, CNG and LPG cylinders and vessels. In this regard, two composite cylinder manufacturing plants (in Yenegoa and Lagos) are under construction by Rungas Industries.

These initiatives require adequate domestic gas supply and the ministry is engaging with the Nigeria LNG Limited (NLNG) for an additional 250,000MT currently exported for the domestic market.

Gas infrastructure investments and the resuscitation of state-owned gas infrastructure are receiving attention too. The ministry says it has resuscitated the WRPC LPG production facility and 7km pipeline and secured funding assurance from the NNPC for the project.

A Committee on Gas Sector-Wide Review of the Domestic Gas Pricing Framework was set up in June, headed by Usman Yusuf, chief operating officer, Gas & Power, NNPC. The overriding objective is to deepen domestic gas utilisation.

With the Central Bank of Nigeria’s N250 billion intervention funds for the NGEP Nigeria may well be headed towards a new future, where gas gains ascendance as preferred fuel and sustainable economic development enabler.

In its ‘Framework for The Implementation of Intervention Facility For The National Gas Expansion Programme’ the CBN acknowledged that the unattractive state of domestic commercial production and utilisation of gas has constrained private investments. Low levels, in turn, has resulted in the minimal production and utilisation natural gas in its various forms with negative economic, environmental, fiscal and social consequences.

Nevertheless, experts have urged the government to establish a separate regulator for the gas sector, akin to the Nigerian Electricity Regulatory Commission (NERC), to provide a comprehensive, real-time regulation designed to facilitate a robust linkage between electricity and natural gas.