AUDREY JOE-EZIGBO, is the President of the Nigerian Gas Association (NGA). In this interview with OLUSOLA BELLO, Joe-Ezigbo talks about NGA’s role in the promotion and protection of the gas industry in Nigeria. She also shares her thoughts on the unfolding key developments in the industry. Excerpts:
Can you tell us about the role of the NGA in Nigeria’s gas industry?
NGA is the umbrella association that represents the entire players and participants within the gas industry value chain. We are the voice of the gas industry in Nigeria. Primarily, NGA was set up in 1999 to champion use of natural gas as a preferred fuel in Nigeria and to advocate on all issues relating to natural gas for the benefit of the industry and the nation. We are a chartered member of the International Gas Union (IGU), therefore, we also represent Nigeria on the global landscape of gas associations.
We are non-political, non-partisan and independent organisation driven by 4 cardinal value propositions, the foremost is our advocacy for the right policies, regulatory frameworks and enabling legislations to ensure that our gas industry is moving in the right direction. We do a lot of capacity building through various learning and development platforms designed to enhance the industry and the public’s understanding of gas. We advocate for the highest levels of safety and quality standards within the gas industry. We do a lot of work centered on investment promotions within Nigeria, and of course, also facilitating cross-border partnerships across the African region, as well as globally. We are the most authoritative resource for industry data and thus, lend ourselves to potential investors who are looking to substantiate information and data concerning various aspects of the industry.
The NGA has quite a robust membership base comprising upstream exploration and production companies, midstream transportation and processing companies, downstream distribution companies, power generation and distribution companies, as well as various end users who deploy gas as fuel or feedstock. Additionally, we have several members who are non-core gas players, but whose operations service the gas industry, including banks and other financial service providers, legal firms that specialize in energy law, maritime companies, insurance companies, consulting companies and the like. We also have individual associate members and a large student membership.
What is the role of NGA in the promotion and protection of the interests of the gas industry in Nigeria?
What we do is to ensure that on one hand, we engage with the government to understand their outlook and intentions for the industry and then we share with them our own insights on the workings of the industry, and potential impacts of their proposed actions on the industry and our members. On the other hand, we also engage with our members to ensure there is also clarity on their part regarding the government’s objectives. Essentially, we push for mutual understanding and collaboration so that, as much as possible, the government and the industry are not working at cross-purposes.
We are constantly in engagement with government at various levels, from the executive to the legislature. We engage with the ministries for petroleum resources, power, trade and industry, with the NNPC. We also engage with the Department of Petroleum Resources (DPR), Central Bank (CBN), Nigerian Investment Promotions Commission, and a host of other MDA’s who have one form of oversight role in our industry.
NGA was a key player in the shaping of the PIGB, the 2017 National Gas Policy, the draft National Fiscal Policy. We are working with the DPR now on the review of the National Gas Network Transportation Code. We also work with other sector-specific gas industry groups to ensure we are driving the same agenda for the gas industry, and so much more.
I must tell you that so far, our engagements have been encouraging and we are hopeful for significant traction for the industry over the shorter to medium term.
You recently led the NGA team to meet with Vice President Yemi Osinbajo?
Indeed, I was privileged to lead members of my council and association into a meeting convened by Vice President Osinbajo at the instance of NGA. We had a very robust engagement. We highlighted the criticality of certain issues which, in NGA’s view, are militating against the progress of the power sector, and more broadly, the domestic gas industry.
In NGA’s view, there is integral role of thermal power generation in the attainment of the ERGP objectives, the 7 Big Wins, and the importance of power sufficiency to Nigeria’s competitiveness and ability to take full advantage of the African Continental Trade Agreement (AfCTA).
We shared with the Vice President our take on the critical illiquidity issues in Nigeria’s power sector and the fact that, a lot more needs to be done beyond the payment assurances which have in themselves so far proved inadequate in resolving the issue.
NGA’s recommendations in this regard hinge on the necessity for us to address the power tariffs once and for all. We must build a self-sustaining (willing buyer, willing seller) gas-to-power market and for this to work seamlessly, we must establish market-reflective tariffs in the power sector.
There is also the lingering issue of forex exposures being borne by gas suppliers to the power sector arising from the investment and revenue currency mismatch; investments in the gas sector are made in dollars while gas invoices are paid in naira at the CBN rate, resulting in a value erosion of about ₦ 60/Mscf or 18% of value of gas sold. This is a situation that degrades project economics, profitability and viability and ultimately makes the gas sector unattractive to investors.
Another major point of discussion was centered on what the NGA sees as sustainability issues in the domestic gas market; the arbitrary fixing of gas prices across the value chain, and some draft resolutions and recent gazettes put out which portend an unsustainable supply and distribution of gas to the last mile customers. Towards the tail end of the last administration, there were policy moves that totally negate the direction of the National Gas Policy which was signed in 2017 as well as the thrust of the Domestic Gas Supply and Pricing Regulations and Policy 2008, both of which enshrined the movement to a liberalised gas market guided by a willing buyer-willing seller pricing philosophy. Our primary concern is that in trying to subsidise one sector, the entire downstream commercial sector, which is the main anchor of liquidity in the gas value chain, is being sacrificed.
We discussed with Vice President Osinbajo regarding NGA’s view of interface issues between the supervising ministries in the gas-to-power sector. In the last administration, NGA had unfettered access and the ear of the Minster of State for Petroleum Resources, but we were largely unsuccessful in our attempts to engage with Ministry of Power. Given that about 80% of our national power generation is thermal, the gas-to-power chain is critical to our achieving any aspirations concerning power in Nigeria. This is a reality we cannot get away from.
NGA’s recommendation is the establishment of an integrated Energy Ministry, but in the absence of this, a cabinet portfolio for gas or other mechanism(s) to ensure a holistic engagement of gas Industry issues in general, and gas-to-power issues in particular, at the highest levels of government.
Indeed, NGA commends Vice President Osinbajo for the seriousness which he accorded our request for the meeting, and his pulling into the room all the key power sector stakeholders including the Ministry of Power, NERC, NBET, the Central Bank of Nigeria and the DPR amongst others.
Among other commitments, VP Osinbajo has directed that NGA must be represented in all deliberations and consultations relating to gas and power, to ensure that the government always feels the pulse of industry stakeholders before choosing a course of action. He also constituted a sub-committee to come up with an action plan for the resolution of some of the specific issues we had raised.
What are your expectations from the new Minister of State for Petroleum Resources?
What is of paramount importance in ensuring the success of Minister Timipre Sylva is that it is his own personal determination to steer the ministry in the right direction, and that he remains in constant consultation and communication with his stakeholders, from his ministry and the various MDA’s that interface with his ministry, to the NGA and other professional associations within Nigeria’s energy sector. He has clearly started off on the right footing.
In terms of our expectations, we would be happy to see an acceleration of the progress of the 7 Big Wins, especially Big Win 3 which is the Gas Revolution. Within Big Win 3 are plans for gas infrastructure development, gas revolution projects, reduction of gas flaring and gas-to-power.
I was very glad to hear him define amongst his priority focal areas, the progression of the Nigerian Gas Flare Commercialization Program (NGFCP) and the aggressive promotion of the passage of the Petroleum Industry Bill (PIB). It is encouraging to see that in addition to any new initiatives he may bring on board, he is clearly going to build on the work that has already been done by former Minister Emmanuel Ibe Kachikwu.
Continuity of policy direction is key. He must be able to move whatever was working to the next level, and then also work assiduously to resolve any lingering challenges he might have inherited, of which there are many. NGA certainly wants to see a more aggressive approach towards the implementation of the National Gas Policy.
What is your take on the bankability and marketability of the NGFCP?
The NGFCP is a highly laudable initiative and it is an integral part of attaining Big Win 3 and the National Gas Policy. According to the NNPC, Nigeria flared 282.08 billion standard cubic feet of natural gas in 2018, which is about N234bn that should otherwise have been channeled to developing our infrastructure. You will appreciate that while the volume of gas flared in Nigeria is down from about 2Bscf/d where it was 10 years ago, flaring still constitutes a colossal waste of resources. Is it bankable? I believe so, and if there are concerns around its bankability, the onus is on us to ensure that those concerns are properly addressed. This is a program which by their estimation has potential to generate a GDP impact in the region of $1billion per annum from a resource which we are otherwise literally burning in the air at flare sites.
So we see it as a laudable and bankable program. However, like any other new program, there are clarifications that need to be made and refinements that need to happen so that the workability of the program is not impacted. I can tell you that some of our members are questioning why they should be penalised for safety flares which are an international HSE mandate. Some of our members have suggested that, rather than the one-size-fits-all approach, the penalties should have been segmented in order to address the distinct operations of marginal field operators. There are concerns about when the penalty regime actually kicks in. The bottom line is that if this program can be successfully implemented, it can completely change the narrative about Nigeria as a gas flaring nation.
We have been hearing about a proposed National Gas Network Code for years. Are there any developments on this?
Yes, there have certainly been quite a few developments with respect to the National Gas Transportation Network Code. And you are right, it has been quite a few years in the making, starting from about 2003 when the then Ministry of Petroleum Resources commissioned the development of a network code for Nigeria. NNPC took another stab at this in 2010 and an oversight board was set up comprising representation from the Nigerian Gas Company (NGC), the DPR, the Gas Aggregation Company of Nigeria (GACN) and the Ministry of Petroleum Resources. In fact, the output from this effort was presented to the House of Representatives around 2013. A lot of work has however been ongoing since last year between the DPR, NGC and others to produce the current draft that is at hand.
The DPR has formally issued the draft Code and ancillary documents to the NGA for our review and inputs, which is currently ongoing. A stakeholder engagement session is also being organized by the DPR, at which forum there will be an industry-wide joint review of the final document which will be sent in for regulatory approval.
The Code will ensure a higher level of market efficiency, transparency, flexibility and liquidity. It will enable gas trading and gas swaps across the nation. It will allow new participants enter the gas market without the inadequacy of infrastructure being as much of a constraint or dent on project economic viability and so on. It will also greatly enable the viability of programs like the NGFCP.
With the current limitations of the existing pipeline infrastructure, what are the strategies to reach the unserved market?
Last mile connectivity has actually been a huge challenge that has impacted on the development of the downstream gas industry for decades, especially as a result of the inadequacy of our pipe network. In recent years, we have seen virtual pipeline technology solutions come in to fill the gap and ensure gas is able to get to unserved and remotely located industries or plants. Today we have several compressed natural gas (CNG) players, as well as liquefied natural gas (LNG) players making significant investments and expanding the frontiers of domestic gas-based industrialisation.
The NGA continues to commend those of our members who have very bullishly decided to invest in the deployment of virtual technology to address the infrastructure gaps, particularly as they face their own unique sets of challenges.
Virtual technology and last-mile delivery of natural gas by way of CNG and LNG is certainly significantly more expensive than gas delivery through pipelines. This is primarily because of the added costs of the equipment for delivery and storage, compression and/or regasification, security, logistics and so on. These virtual options are still comparatively significantly cheaper than any alternative liquid industrial fuel such as diesel (AGO), and therefore they make sense over the short to medium term. Long term however, we must as a nation work quickly to develop a robust network of pipelines crisscrossing the entire nation.
Do you see the FID on the NLNG Train 7 impacting on other LNG projects such as Ok LNG and Brass LNG?
The NLNG is one of the founding corporate members of the NGA and remains one of our most committed members to date. They have done great work for the industry and their communities, and indeed their contributions to the nation are invaluable. The Train 7 FID is long overdue and I have no doubt that it will bring multiplied benefits to Nigeria. Will this be instrumental to bringing the OKLNG and Brass LNG projects to the fore any faster? I do not think so, otherwise the successes of the previous trains should have been more than enough reason for those projects to have come on stream years ago. There are other underlying issues relating to those projects. The global gas industry is changing, and the global LNG industry is changing even more so. The Africa LNG space is evolving rapidly. Our domestic gas markets are also changing. If there is broad recognition and appreciation of the success of the NLNG project, model and company; we need to progress the OK LNG and Brass LNG projects as rapidly as we can.
In what way is the NGA ensuring the next generation is being equipped with the right skills set to steer the industry?
As the industry has evolved over the past few years, we have recognised that there is a growing need to ensure that the right skills sets and competencies are being built in the industry. The pace at which new projects and technologies are unfolding, and at which existing skilled personnel are aging, retiring and relocating has been a cause for concern to us. Thus, capacity building is one of our focal areas.
NGA runs various programs and learning initiatives through which we contribute to the body of industry knowledge and technical skills. Every year, we organise Business Forum where we bring in subject matter experts to speak to different aspects of the industry operations. We host an international biennial conference and exhibition which allows technology players and global industry players and participants to interact and share experience, forge alliances. At our conferences and events, we always make provision for our student members to attend.
NGA also has a flagship Learning Solutions program which is our dedicated training for gas professionals. We also use this platform to offer training for non-gas professionals who are looking to gain better understanding of the industry.
We are currently building the framework for a Gas Academy which will offer a fully certified Gas training courses. The preliminary work on this has been done and we are moving shortly into the finalising of the modules. The Gas Academy will run as a mixture of on-site and online deliveries, with internships and examinations being prelude to graduation and certification.
We are also developing modules that will be targeted at our student members, particularly those in higher institutions that have dedicated oil and gas engineering departments. The objective is to equip them to be more attractive to employers by the time they graduate. We have engaged with the Nigerian Content Development and Monitoring Board (NCDMB) in this regard, as we propose to partner with them as part of our contribution to the Nigerian Content development and the building of local capacity.
At 20, would you say the NGA has lived up to expectation as the voice of gas industry in Nigeria?
I would say that it has been a difficult journey but rewarding, nonetheless. We have seen the NGA grow from its initial formation with just a few members, primarily the international oil companies and the NNPC, to the very robust membership base we have today. We have evolved from a small association back in the day to an invaluable strategic partner to our members, the broader industry and the various levels and arms of government.
Going forward, I see NGA taking on more of a leadership role on the international front. We are members of the International Gas Union (IGU). In 2018, for the first time, we were able to get a Nigerian, the first African at that, appointed to the position of Vice Chair, IGU Exploration and Production working committee; which we are in line to Chair come 2021. This will open the door for other Nigerians take on the leadership of other IGU communities, thereby increasing the NGA’s role and relevance in the international discourse of gas.
NGA has come into its own. Today we are a recognised stakeholder and authoritative voice, a key resource and reference point for gas and gas-related matters in Nigeria and beyond. We still have a lot of work to do, but we are certainly up to the task.
OLUSOLA BELLO
