Qatar’s decision to jettison oil cartel and its new status as a gas giant are shedding light on Nigeria’s missed opportunities and untapped potential as corruption and inefficiency hobble oil and gas industry in Africa’s largest economy.
Last week, Qatar invited international oil and gas majors including ExxonMobil, ConocoPhillips, Shell, and Total to file bids for the expansion of the Qatari part of the world’s largest gas field and the country’s Liquefied Natural Gas (LNG) export capacity.
This contrasts with the situation in Nigeria, whose oil and gas industry is in a state of decline as policy inertia feeds a lack of investments by oil majors.
According to Qatar’s Minister of State for Energy Affairs Saad Al-Kaabi, the country plans to increase its LNG production capacity by 43 percent from 77 million tons annually currently to 110 million tons a year in five years’ time.
“Qatar aims to award by the end of this year the contracts for work on the North Field, which Qatar shares with Iran and which Iran calls South Pars,” Al-Kaabi, who is also the president and chief executive at state-held Qatar Petroleum, told OilPrice.com.
The new export capacity includes expansion projects set to be completed in 2024. Qatar will be competing with Australia and the United States over the next few years for the world’s top LNG exporter title.
“In the first quarter, we would have secured all the contracts for construction to start production in 2024,” Al-Kaabi told Bloomberg.
Already, Qatar has shortlisted several big oil firms willing to buy a stake in its mega project to expand its LNG export capacity, and would look at what the majors could offer in exchange for a piece of the project.
Qatar has selected a few “big players” which it has invited to submit bids, Al-Kaabi said.
But until Qatar raises its LNG export capacity, Australia will consistently export more LNG than Qatar within the next year as LNG facilities in Australia are ramping up production and exports, according to the U.S. Energy Information Administration (EIA).
Currently, Australia will be the next top LNG exporter, but it will likely retain that title for just a little while, as both Qatar and the United States plan major expansions in their LNG export capacities over the next five years.
Nigeria holds Africa’s largest gas reserves of more than 202 trillion cubic feet, but flares, or burns, most of the gas it produces along with oil because it lacks the infrastructure to process it.
In the first seven months of 2019, Nigeria flared a total of 147.72 billion standard cubic feet of natural gas amounting to a potential loss of $413.6 billion that would have had potential value to Nigeria’s economy.
Much is also lost to the Nigerian economy from the lack of gas to power domestic industries due to investment shortfalls and opaque prices for the gas that manages to get to international markets.
“Nigeria is richer in gas than anything else in terms of hydrocarbon, which is why Transcorp has prioritised upstream energy as a major component of the gas strategy,” Valentine Ozigbo, president and CEO, Transcorp plc, told BusinessDay.
Nigeria has never been short of big ideas and projects when it comes to gas. Nigerian Liquefied Natural Gas (NLNG) Trains 7 and 8, Brass LNG, and Olokola LNG have been awaiting final investment decisions for years. The $12 billion Trans-Saharan Gas Pipeline Project (TSGP), expected to help Nigeria achieve zero gas flaring by 2020, remains an illusion 17 years after it was conceived.
“Significant opportunities exist in the gas value chain either in upstream, midstream or downstream with incentive already codified into law,” KPMG, a multinational professional services network, said in its Nigeria oil and gas outlook content.
For Qatar, the move to reduce the focus on oil and concentrate on LNG is even pragmatic. As the world begins to take the threat of climate change seriously, fossil fuels which are a big contributor to greenhouse emissions will be increasingly maligned even if the world grudgingly continues to depend on crude oil.
Qatar recognises that cleaner fuels like LNG have a brighter future than oil, given the global trend of moving towards cleaner fuels.
Like Nigeria, Qatar has a state-run oil company, Qatar Petroleum (QP). Qatar Petroleum owns a 70 percent stake in Qatargas but majors Exxon Mobil (US), Total (France), Shell (UK-Netherlands), and ConocoPhillips (US) account for most of the remaining 30 percent. These majors along with Eni (Italy) are considered frontrunners to participate in expansion of North Field, one of the largest natural gas fields on the plant.
While the world continues to work itself into a frenzy about getting a piece of Saudi Aramco project in what would be the world’s largest private company, the energy world has largely shrugged, instead showing more interest in Qatar, the small peninsula off the coast of Saudi Arabia.
Aramco’s privatisation is long past due and comes at a time when oil is politically toxic, unlike natural gas which is cheaper and can allow the world transit to a cleaner fuel mix. This development puts Qatargas in a much better position and allows less environmental, financial, and political risk than Aramco.
Qatargas also carries less leadership risk unlike Saudi Aramco whose crown prince, Mohammed Bin Salam, may flash a charming smile when he visits Europe but has made many questionable decisions.
Some stakeholders have said if Nigeria were to be fully exploiting its gas resources, it could potentially be adding as much as $17 billion annually or as much as 6 percent to its less than $500 billion economy, helping to uplift millions of its citizens, 47.7 percent of whom live in extreme poverty.
DIPO OLADEHINDE
