Timipre Sylva, minister of state for petroleum resources earlier this year, announced that 2020 is the year of gas. After decades of dependence on crude oil, prices are trending south and diversification seems inevitable. And then Covid-19 happened.
The Covid-19 pandemic has hit Nigeria’s economy harder than any event as government has shuttered businesses and restricted freedom of movement. Demand for gas has fallen and revenue to gas producers has declined due to poor returns from power distribution companies.
According to the minister, his key priorities between 2019 and 2023 includes curbing petroleum products cross border leakages, completion of the Nigerian gas flare commercialisation programme, increasing crude oil production to 3million barrels per day and reducing the current cost of crude oil production by at least 5 percent.
Others are passage of the PIB bill, promotion of inland basin exploration activities, promotion of deep offshore activities, collaboration with private sector to aggressively increase domestic refining capacity and supporting the president’s plan to raise millions of Nigerians out of poverty through job creation.
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“The industry is super riskaverse but need to prepare for the changing world that lies ahead and map out a strategic direction to thrive postCOVID- 19 crisis,” says M. M Ibrahim, chairman, National Gas Expansion Programme (NGEP) in the Ministry of Petroleum Resources) at the Nigerian Gas Association (2020) Virtual Business Forum, represented by Justice Derefaka, Technical Adviser, to the minister of state and Program Manager, Nigerian Gas Flare Commercialization Programme (NGFCP).
The Nigerian Government in June 2017 approved a gas policy which aims to move the economy from oil to gas, extend gas penetration in the domestic market in order to facilitate growth of all sectors, end gas flaring and address environmental issues and provide an enabling environment for increased private sector participation in the gas sector.
To drive this policy, the Federal Ministry of Petroleum Resources conceived the National Gas Expansion Programme to serve as a catalyst for adding value to the vast natural gas reserves Nigeria is endowed with.
The goal is to assist with identification of existing policy, legal and regulatory frameworks & commercial instruments that are hindering the development of the local gas sector, reforming and implementing the promotion of a market structure in a manner that will ensure the utilization of gas infrastructure, assets and facilities on a common carrier and co-sharing basis.
It would also formulate strategies that will promote cost effective distribution of the various gas streams by marine, rail and road for achieving a most affordable, available, acceptable and accessible gas to Nigerians and engage all state and nonstate actors in sensitization programmes on all aspects of safety in relation to gas utilization in the country.
Currently, Nigeria is under using her vast gas resources. For example, Australia has proven reserves of 128 TCF of gas but its current LNG output is 88mpta, Malaysia has 97 TCF of proven gas reserves and produces around 29mtpa of LNG while Nigeria with 201TCF of gas has an LNG output of 22mtpa.
Africa currently holds a share of around 6 percent of global marketed gas production, that share is projected to rise to more than 10 percent by 2050 if the current short-term shocks and natural gas price environment will not have any considerable impact on the long-term projections.
“Nigeria’s gas proven reserve (200 tcf ) indicates an inherent possibility of exploiting gas reserves for at least the next 100 years with the potential for a further 600tcf in unproven reserves,” says Ibrahim.
To unlock the opportunities, more public and private sector collaboration is now required with interest groups including research and development, business and the public sector to explore for more ideas. Audrey Joe-ezigbo, president of the NGA said that the organisation was available to provide support in her remarks.
Ibrahim proposes a new taxation regime that facilitates investments, cost reduction programmes and deferring any gas projects or other discretionary spending and reinforce efforts to build domestic gas supply chains and capabilities.
“Local Content should seek to create jobs & diversify Nigeria’s economy. COVID-19 has demonstrated the fragility of global supply chains and the imperative to produce all that we need to operate within our borders.
He also said that Nigeria could use natural gas and diversify, and invest in chemicals and industrial clusters that provide a means to integrate along the value chain.
Gas Industry players could also localize materials supply chains and supporting capabilities, through on- demand manufacturing, R&D and specialized technical education & training.
“As an Oil-dependent nation, we must do more than merely hope for the past to return. Instead, post COVID-19, we must seize the opportunity to transform and diversity our economy with the abundant natural gas resource,” Ibrahim said.
Ibrahim said that Nigeria needs to use gas and invest in critical sectors of the economy such as education, health, infrastructure and agriculture to provide a solid base for industrialization, local value addition, economic development and sustainable growth.
“Gas has a leading role as a key enabler to the diversification and growth of Nigeria’s broader economy through adequate power generation, provision of feedstock for value-adding manufacturing, and increased government revenue from LNG.
Pre & Post COVID- 19, the development of Nigeria’s vast gas resources & strengthening of the gas value chain should be a national priority, Ibrahim said.