Power plants suffer on Nigeria’s gas contradiction

While 12 power stations could not produce electricity during off-peak period during the last holiday was due to gas constraints, Nigerian National Petroleum Corporation (NNPC) October operations report shows that 43.54% of gas produced was either re-injected, used as upstream fuel gas or flared.
This has been the trend in recent times as shown from an analysis of NNPC monthly operations report which states that nearly half of gas produced in the country could not be commercialised.
The Nigeria Electricity Supply Industry, NESI, citing statistics from the National Control Centre, Osogbo, stated that Afam IV-V, Geregu Gas, Alaoji National Integrated Power Project (NIPP), and Olorunsogo Gas plants could not produce a single megawatt (MW) on December 25, 2016.
Others that could not produce a single megawatt (MW) on the same day, include Odukpani NIPP, Okpai, Ibom Power, ASCO, AES, Omoku, Rivers NIPP and Gbarain power plants.
Due to gas constraints, 3,000 megawatts of the nation’s power generation capacity idle. Nigeria generates over 70 per cent of its electricity from gas-fired power plants, while output from hydro-power plants makes up about 30 per cent of total generation.
NNPC October operations report say out of the 215.43 BCF of gas produced in, a total of 121.63 BCF of gas was commercialized comprising of 29.29 BCF and 92.34 BCF for the domestic and export market respectively.
This translates to an average daily supply of 945.00 mmscfd of gas to the domestic market and 2,978.80 mmscfd of gas supplied to the export market.
This implies that 56.46% of the total gas produced was commercialized while the balance of 43.54% was either re-injected, used as upstream fuel gas or flared.
Gas flare rate was 10.49% for the month of October 2016 i.e. 728.70 mmscfd compared with average gas flare rate of 9.36% i.e. 669.68 mmscfd for the period November 2015 to October 2016 reports the NNPC.

The Nigerian Extractive Industries Transparency Initiatives (NEITI) report on the review of NNPC’s monthly financial and operations report released December 20, 2016 attributes low gas utilisation in Nigeria to the absence of gas terms in Nigeria’s PSCs which has forced down by 19.6 per cent gas production in deep offshore between January 2015 and September 2016.
Currently, Joint Ventures are now the largest gas producers accounting for about 70% of gas production, even though deep water offshore where PSCs prevail have vast gas reserves. The absence of gas terms in contracts with the Federal Government prevents investments in the sector.
“A possible explanation for this is that the signed PSCs do not make any provision for how the parties should treat gas available for commercial exploitation; except that the parties define a separate agreement. No such agreements have been concluded,” NEITI says.
Chuks Nwani, energy law and vice president Powerhouse International Limited, told BusinessDay that because gas infrastructure require huge capital outlay over a period of as much as five years, Nigeria’s policy inconsistences does not give investors’ confidence. Worse still, there is no synergy among related government ministries.
“When government came up with this policy (national gas policy), we felt that so many things needs to be addressed, especially having a synergy between the ministries of power, petroleum resources and Nigerian gas company. They are working at cross purposes and none understand what the other is doing,” he said.

 

ISAAC ANYAOGU