Unlocking Nigeria’s gas potentials will require partnership between the Nigerian Government and oil and gas companies that have the ability to innovate, capacity for domestic gas market and willingness to make long-term commitments.
But for this to happen there are several challenges stakeholders must overcome in order to successfully develop growth projects for the domestic market.
There is however hope that some of the challenges would be resolved as Shell Petroleum Development Company has given thumbs-up for the new funding arrangement for the joint venture oil and gas operation in the country that is currently operational and which is expected to resolve the Nigerian National Petroleum Corporation NNPC funding constraints.
This new funding arrangement aims to increase gas production by optimising existing operations as well as accelerate the completion of new gas development projects.
The company has however said that without payment of outstanding gas and power invoice arrears and securitisation of current and future revenues, operators are reluctant to commit additional investments to grow domestic gas.
Another challenge deals with the need to attract investment to further develop infrastructure along the gas value chain, for example creating a more robust pipeline network to improve reliability and security of supply.
The reliability of the existing power transmission line, the multinational oil company in its Brief Note for 2019 noted, must be improved upon as its weakness has inhibited evacuation of the much-needed power to the national grid.
Also, ensuring a conducive environment is essential to attracting investments and running reliable operations.
This includes a respect for the sanctity of existing contracts, predictable regulatory, commercial and legal framework across the country.
Overcoming security challenges in the Niger Delta that has experienced an increased risk to personnel and property as well as the disruption to operations is also very important.
Shell says it has continued to boost production of natural gas for domestic power generation and export, as SNEPCO’s growth ambitions in deep water includes expansion of natural gas production, while Shell Nigeria Gas, also one of its subsidiaries is at the forefront of providing domestic gas to industrial customers and manufacturing plants.
The Nigeria Liquefied Natural Gas Limited (NLNG), it also noted, remains a strategic asset in a growing and increasingly competitive global LNG marketplace, in which the Shell Group has a world-class portfolio.
On the new policy of flared gas commercialisation programme, the company said: “Remaining sites with low volume flares are located in remote areas and since late 2016, SPDC has been working with third parties to develop small-scale projects to capture the associated gas from these sites for domestic utilisation.”
It added that following successful engagement with the FGN, the SPDV JV had included these sites into the ‘Nigeria Flared Gas Commercialisation Programme, which it said was expected to address these remaining sites.