US oil producing giant, Exxon Mobil, says it is committing $3 billion to gas resource development in Nigeria.This sum is $1.2 billion higher than the $1.8 billion investments the company has committed to gas projects in the country in the last three decades.
Analysts say this development will significantly boost electricity generation, encourage the sprouting of other anciliary businesses, including ferterlisers, petrochemicals and methanol, leading to the creation of hundreds of job opportunities and the reduction of gas flaring.
The commitment was contained in the executive briefs of Nolan 0’ Neal chairman / managing director, ExxonMobil Upstream and affiliates in Nigeria, when he visited President Muhammadu Buhari and assured him of the commitment of his company to the development and growth of the nation’s hydrocarbon industry.
The affiliates of ExxonMobil have continued to lead the industry’s effort to end flaring through gas utilisation and monitisation of projects, 0’ Neal told the president.
He further explained that, “most of the natural gas produced in the country is associated gas, produced along with crude oil. As part of its aggressive pursuit of gas monitisation and utilisation strategies, the Nigerian Government is developing legislation and policies aimed at regulating and growing the domestic gas market”.
He said the development of economic domestic policy outlets for gas would be greatly beneficial in meeting the goal of eliminating all non-routine gas flaring.
O’Neal informed the President that even though the company’s investment drive is laudable, the challenge for the government is for her to create a commercial environment that encourages the development of gas utilisation projects to benefit all stakeholders.
He pointed out that Nigeria is an active member of the World Bank Global Gas Flaring Reduction Partnership(GGFR) which comprises of the World Bank ,governments of oil producing countries, and international and state owned oil companies .
The partnership according to him, is actively working on efforts to identify and implement economically feasible alternatives to gas venting and flaring. “ExxonMobil is also a member of the GGFR and is actively engaged in this partnership’s efforts.”
He named the specific deliverables of GGFR to include developing a voluntary international flare reduction/elimination standard, improve natural gas flaring and venting data and establish best practices for flaring efficiency, as well as disseminate “best practices”.
He listed other deliverables as including financing mechanisms for gas flaring reduction projects, carbon credit trading, improving the legal and regulatory framework for investments in flaring reduction, and providing assistance with developing local markets, gaining access to international markets, and finding solution for remote fields.
“ExxonMobil supports a collaborative process and encourage its affiliates to engage with host governments around the world to progress constructive venting and flaring reduction initiatives and develop legal /fiscal frameworks that stimulate growth of local gas markets and provide incentives for investments,”he said.
Erha field holds one of the biggest gas volumes and is being operated by ExxonMobil. It is believed to have gas reserves in the region of over 200 billion standard cubic feet, according to analysts .
This could easily be developed to mitigate the suffering of Nigerians, occasioned by inadequate power supply, if government creates the right commercial framework, industry analysts say.
The gas volume in Erha is four times more than those in Papau New Guinea, where ExxonMobil, the parent company of the Nigerian subsidiary, has built an LNG plant. But analysts argue that the operating environments are different.
The commercial framework is more favourable in Papau, than in Nigeria, where the non-passage of the Petroleum Industry Bill (PIB) has stalled investments in the oil and gas industry.
According to some industry operators, Erha is about 120 kilometres from Lagos and with about $2 billion in investment, the project would have been developed and put to use for the benefit of Nigerians, but this was stalled by misunderstandings between ExxonMobil and the Federal Government, over the ownership of the gas finds in ExxonMobil’s oil fields, as well as the fiscal terms.
Laying pipelines from the location of the gas straight to Lagos would have been less cumbersome if government was serious about getting gas to feed power plants, as there would be no communities on the sea to disrupt or burst the pipeline as is frequently experienced in the onshore, an industry operators said.
He further said that from Lagos, the gas could be transported through some reliable processes to power plants around the metropolis and beyond, and the Ecravos –Lagos gas pipeline, which also services the gas needs of other West-African countries.