Operators in the gas industry insists that achieving commercialisation of gas flaring and total flare out by 2020 as projected by the Federal Government will be dependent on having in place the right regulatory framework.
They argued that with just a few years before we hit year 2020 and the unresolved issue of lack of gas infrastructure coupled with the widespread flaring of associated gas, the Nigerian government has much ground to catch up if it ever wants to achieve this projection.
Emmanuel Ibe Kachikwu, Minister of State for Petroleum Resources had at different occasion stated that the expectation of government when it developed a Draft National Gas Policy was to set out strategies and an implementation plan for medium to long-term targets for gas market development.
Kachikwu insists the policy will promote a competitive business environment for both current and new investors, articulates government’s vision for the sector and sets policy goals.
Nigeria currently produces an estimated 7 billion scf per day and account for an estimated 182 trillion scf of gas reserve. Among this figures, only 13.3 percent is consumed locally of which 8.9 percent is allocated to gas-to-power.
He assures that most of the investment required in the sector will be drawn from the private sector as government will set the environment and support investors with appropriate interventions to bring their projects to fruition
Ayodele Oni, an energy sector lawyer observes that the aspiration to commercialise gas flaring by government would just be a mere policy statement if managers of the economy doesn’t address pressing issues bedeviling gas sector in the country currently.
Oni maintains that attracting the needed investment to drive the commercialisation of gas should start with the introduction of the domestic gas obligation which imposes an obligation on the oil companies to assign certain percentage of the gas being produced for domestic uses.
“Looking at what is going on in the industry, the future is selling our gas domestically because the international prices are in decline”, he said.
To him, “To achieve the commercialisation of gas flaring projection, the domestic market must be made attractive to investors who need to invest huge capital upfront in gas processing and pipeline for distribution”.
Oni further observe that if the issues around credible and enforceable gas contracts coupled with a price regime are not tackled, willing local investors will continue to shy away from putting their money into production of gas for local use.
Deepak Khilnani, a gas operator acknowledges that the present government is doing a great job in prioritizing utilising domestic natural gas.
He further observes that government is connecting the dots in the power industry by investing in not only power plants, but also the gas fields and the transmission and distribution networks. This is very important to encourage additional private investment in the sector.
He insists that the attainment of these projects will not only broaden the economy; related industries will grow out of these projects, such that jobs and other multiplier benefits will follow.
The key policy intervention that I believe would be a game changer would be to reduce the retail price of gas to industry to a competitive level, which in my view would foster significant industrial growth.
Industry analysts are of the view that Nigeria’s gas development in the medium term could derive much from local demands as from export, if not in volume but in value.
They believe that achieving the desire result in local gas supply or the lack of it will remain a very sensitive issue with government involvement in unrealistic prices.
KELECHI EWUZIE
