• Tuesday, June 25, 2024
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Government urged to create 10-year plan to build infrastructure, develop gas for local use


Nigeria has ridden on the back of oil for more than 50 years, and now is the time to fly on the wings of gas. If the country will achieve its potentials it must begin a decade-long plan to deepen gas for local use in industries, build infrastructure and commercialise gas. This is according to Tony Attah, managing director/CEO, Nigeria Liquefied Natural Gas (NLNG).

In remarks made at BusinessDay’s annual Energy Conference, Tuesday, Attah said Nigeria was not short of policies around gas, what would make the difference was the ability to implement them.

“We say it is a year of gas, but you cannot in one year achieve much to develop gas and become a gas nation,” he said, saying, “We really must be bold to declare a decade of gas and then establish a 10-year window within which the commercial framework to enable Nigeria harness the value of its gas resource and to galvanise domestic utilisation to lead to industrialisation needs to happen.”

Timipre Sylva, minister of state for petroleum resources in his speech at the event, highlighted some of government’s infrastructure projects to deepen gas use domestically to include the take-off of the AKK pipelines, OB3 pipeline connecting the Niger Delta to the South West part of Nigeria and eastern part of the country, and renewed efforts to pass the Petroleum Industry Bill and create a regulatory organ for the midstream sector of the oil and gas value chain.

Mele Kyari, group managing director, Nigerian National Petroleum Corporation (NNPC), said the corporation was focusing on the implementation of the Gas Master Plan, which has domestic gas supply, pricing and infrastructure goals.

“In terms of Gas and Power, we are developing and integrating gas and power infrastructure networks (increase interconnectivity) as well as stimulating gas demand (power generation, feedstock, transport,” Kyari said in remarks made at the event.

With less than 20 percent of the natural gas produced in the country going to the domestic market despite huge demand, stakeholders have advocated for a higher market penetration by putting the right regulations, fixing infrastructural challenges and encouraging private sector in order to unlock the nation’s huge gas potential.

According to ED Ubong, managing director, gas, Shell Nigeria, there are huge opportunities in the domestic gas market that can come through Nigeria’s industrial cycle, through important sectors such as manufacturing, power, feedstock, among others.

“We need to put regulations in place that will put long-term clarity on the availability of gas, Ubong said, noting, “Most investors want to know if gas will be available in the next 10 years, not just a year contract.”
Some of the major challenges facing the sector include the dearth of major gas infrastructure projects, the inability of projects to reach final investment decision (FID), divestments by international oil companies (IOCs) from onshore assets to focus on deepwater without requisite financial and operational know-how by local producers to take them over, and poor regulatory policies. Gas projects also require huge capital outlays.

Gas production in Nigeria has grown from 0Tcf in 1958 to 2.90Tcf in 2018. Between 2001 and 2018, Nigeria’s gas production has grown by 1Tcf. Gas utilisation within the same seven years grew by 40 percent, from 49 percent in 2001 to 89 percent in 2018.

A significant amount of this gas is re-injected for crude oil production, and 11 percent of Nigeria’s gas is still flared, rather than 51 percent two decades ago. Sixteen percent of Nigeria’s gas was exported to the international market in 2001 as against 41 percent in 2018.

On the other hand, domestic gas utilisation has grown by 7 percent between 2001 and 2018, from 7 percent to 14 percent, respectively. This points to a vast opportunity in the domestic gas market, some of the panel members said.

Domestic gas infrastructure deficits have impaired local gas distribution between supply sources and markets, and several towns and cities in Nigeria are underserved and without access to gas.

Attah however said new gas projects should be complemented with the security of assets to prevent vandalism, as the security of assets will guarantee the security of supply.

“The government needs to be more deliberate and focused on gas,” said Attah, as the world is pivoting into an era of cleaner fuel with implications for Nigeria.

Globally, the energy sector is in transition to cleaner fuels due largely to the impact of climate change, which is worsened by burning fossil fuels. But a rapidly growing world population said to increase by over 2 billion in the next 50 years raises hope that the demand for energy will not completely dry out.

“While oil will still be relevant, the focus will move away to gas, which is also fossil fuel but is cleaner and most importantly is available in abundance and we need to start positioning today,” he said.

According to Attah, some multilateral organisations are increasingly withholding financing for fossil fuel based projects, indicating that time is running out for Nigeria to harness its gas potential.

“Countries are making such statements, so we cannot sit back and say we have oil, the relevance of oil is waning,” he said.

On the back of new technologies, hydrogen is looking like the energy of the future as countries like Japan without natural resources is investing in research to develop hydrogen and become independent, he pointed out further.