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Lessons for Nigeria as Tanzania, Mozambique plan to develop East-Africa’s gas hub

Tanzania and Mozambique are setting sail to ride the energy tide that will see economies choose natural gas as preferred fuel to power homes, factories and transport but Nigeria is barely scratching the surface of its gas potential.

The East African duo has the sub-regions brightest projects, located on the south-east coast of the continent in Tanzania and Mozambique. The massive Coral South Floating Liquefied Natural Gas (FLNG) Project sits atop the prolific Rovuma Basin, offshore Mozambique. ENI’s Coral South FLNG facility is the first step in accessing the estimated 450 billion cubic metres of gas. The first gas is expected in 2022 and thereafter ENI expects to produce five billion cubic feet each year.

Further north is the Tanzania LNG Project that hopes to access the massive 1.6bn cubic metres of gas that lies in Tanzanian acreages. The $30bn facility located at Lindi would sit on Tanzania’s coast, acting as a terminal and gas liquefaction hub.

“When we first started in Kenya and then in Tanzania, there was very little understood about the potential of the region; none of the gas in Mozambique had been discovered,” said Brian W Horn, senior vice president and chief geologist at ION, advisors to Exploration and Production companies. “But I would say that there is a lot of remaining potential. I think we probably have not found a tenth of what is out there.”

Nigeria has a bigger gas potential and a number of big-ticket gas projects at various levels of completion and scattered around the country. These big-ticket projects are expected to create thousands of new jobs, spur domestic gas demand and generate electricity. This will also help create an opportunity to diversify revenue of the Nigerian government, strengthen the country’s revenue base and turn Nigeria into a dominant geopolitical player in Africa. Yet, these projects have stalled.

Some of the critical gas development projects in Nigeria include the development of the 4.3 Trillion Cubic Feet (TCF) Assa North/Ohaji South field by Shell Petroleum Development Company of Nigeria Limited (SPDC), a major momentum to the domestic gas aspiration of the Federal Government for increased power generation and industrialisation.

SPDC is also participating in the development of the 6.4 TCF Unitised Gas fields (Samabri-Biseni, Akri-Oguta, Ubie-Oshi and Afuo-Ogbainbri) in conjunction with the Nigerian Agip Oil Company JV while Nigeria Petroleum Development Corporation’s (NPDC) is also developing OML 26, OML 30 and OML 42 which is expected to develop 7 Tcf.

“Some of the fields were discovered as far back as in the 1990s, and have been plugged after successful production test was carried out,” Charles Akinbobola, energy analyst at Lagos based Sofidam Capital told BusinessDay in an early interview.

Over twelve months ago, Ghana signed a 12-year deal with Russia’s Gazprom for liquefied natural gas (LNG) supply boycotting the West African Gas Pipeline (WAGP) and its inefficiencies.

“The gas that will come from Russia to Ghana’s regasification plant will cost $12 per standard cubic feet (SCF). I can put gas at $3 per SCF into the West African Gas Pipeline if it was efficiently managed and with an extra cost of $2 per SCF for transportation cost I can deliver gas to Ghana at $5 per Scf less than half of what the Russian gas will cost” said Austin Avuru, chief executive officer of Seplat, an independent indigenous Nigerian oil and gas exploration and production company in an earlier BusinessDay’s report.

Nigeria can learn from these countries in East Africa that are exploring how to come together to fully exploit the gas potential in its sub-region. For Nigeria, it may not be about collaborating with neighbouring countries to exploit its gas reserves but rather becoming a gas hub in the West African sub-region. This is a leadership position the country has failed to hold due to its inability to feed gas into the WAGP. This has made the Economic Community of West African States (ECOWAS) countries to look elsewhere for gas to power their economies.

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