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Gas investments to get easier as Nigeria launches network code

The Nigerian government has taken a significant step in making it easier for investments into the gas sector by launching the Nigerian Gas Transportation Network Code which will ensure that the wrong quality gas does not go into the pipeline, guarantee gas pipeline integrity, open access and common understanding on metering.

The Federal Ministry of Petroleum Resources (FMPR) on February 10, formally launched the National Gas Transportation Network Code today as part of the opening ceremony of the ongoing 3rd edition of Nigeria International Petroleum Summit (NIPS 2020) taking place at the International Conference Centre (ICC) Abuja.

The Nigerian Gas Transportation Network Code is critical to the government’s objective in firming up the country’s domestic gas obligation as well as promoting export.

“The code will also provide a uniform platform in terms of guidelines for agreements between buyers and sellers which will ensure transparency and eliminate existing bottlenecks,” says Timipre Sylva, minister of state for Petroleum Resources.

The network code could assure investors that when they invest, their gas will be operated in best practices and help in boosting the confidence of international financiers to actively look at the domestic gas market. The bulk of Nigeria’s gas production is for exports.

Justice O. Derefaka; Technical Adviser (TA) – Gas Business & Policy Implementation, To the Honorable Minister of State, Petroleum Resources, says the Network Code is a gas market liberalization enabler aimed at ensuring gas pipeline integrity, open access to pipeline and common understanding on metering with a set of rules and protocols designed to govern the operations of gas network players in a way that impacts the gas market as part of efforts towards transparency and efficiency in the operation of pipelines in the country.

“The code will ensure transparency in the industry, guarantee fair and non-discriminatory access to the gas transportation network, attract foreign investors, help to ensure that wrong gas does not go into the pipeline and ensure growth and development in the Nigerian Gas Industry,” Derefaka said.

This Network Code aims to harmonize gas balancing arrangements to support the completion and functioning of Nigerian gas market, the security of supply and appropriate access to the relevant information, in order to facilitate trade and to move forward towards greater market integration.

According to a DPR report, Nigeria’s natural gas reserves have been on the increase from 2013 and is projected to continue to grow at a conservative rate of about 1.0%. It said the reserves volume of the operated deep-water acreages in Nigeria is about 21% of the country’s total reserves of liquid hydrocarbons (7.746 BillionBbls/37.002BillionBbls). Yet the acreages accounted for about 36.08% of the Nation’s total production in 2018.

Over the years, the process of piping this gas has been fraught with challenges from the wrong gas transported over the pipelines to different metering parameters. The code seeks to eliminate these.

“The Network Code will also enable new ways of doing business in the Nigerian domestic gas market. And every gas meant for domestic use either for power, petrochemical or industrial will have a single entry and exit point to cut short the sharp practices prevalent in the current supply and distribution system,” says Derefaka.

As part of the regulatory and operational mechanism, the Network Code has other ancillary agreements and Licenses to be issued to the users of the Code including Supplier, Operator (or Transporter), Shipper and Agents Licenses Framework/Accession Agreement, Network Entry/Exit (Interconnection) Agreements and Operational Balancing Agreement (OBA).

There are also Business Process Documents including Capacity Registration Form, Capacity Transfer Notice, Nomination Forms (Rolling Annual Estimates, Weekly Estimates, Daily Notice, Trade Nomination, Re-nomination), Curtailment Notice, Invoice, Invoice Remittance Advice, Maintenance Notification Form, Imbalance Form in place for effective operations and functioning of the code.

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