Unlocking Nigeria’s gas potential of over 202 trillion cubic feet (Tcf) of proven natural gas reserves or moving from being an oil economy to a gas economy will require the right regulations, collaboration between the Federal Government and the private sector.
This cooperation will drive the ability to innovate, grow capacity for the domestic gas market and increase willingness to make long-term commitments by investors.
This is according to experts at Thursday’s BusinessDay Oil & Gas Roundtable at Four Points by Sheraton, Lagos.
The total value of Nigeria’s proven gas reserves is over $460 billion, more than the country’s gross domestic product (GDP) as of today. Yet, in a world where gas is emerging as the fuel of the future, Nigeria lags due to its inability to articulate a clear vision for energy security around gas.
At the event, the experts said the inability to review obsolete regulations and update outmoded laws had kept the oil and gas sector on its knees with foreign investment looking the directions of other countries, apart from Nigeria.
In order for a gas economy to work, Audrey Joe-Ezigbo, president, Nigeria Gas Association (NGA), said Nigeria must create an environment where industries and foreign investment can thrive because gas commercialisation was one of the primary ways of driving industrialisation, and also a faster solution to its poverty problems.
“We need clearly focused regulations that will create gas-based industries, which will absorb teeming employable youth and create a multiplier effect that will affect the SME corridors which will change the things we do in this country,” Joe-Ezigbo told the audience.
According to Joe-Ezigbo, Nigeria cannot be regulating pricing and be expecting investment dollars to come into the country, as “we can’t have a welfarist agenda and yet be expecting capitalist money in the economy.
“Certainty of investment is another major concern, Nigeria has adopted an oil philosophy and is failing understand how to run a gas economy,” Joe-Ezigbo noted. “Nigeria is still focusing on associated gas, when are we going to start focusing on Non-Associated Gas (NAG).”
Odein Ajumogobia, former minister of petroleum resources and current chairman of Nigeria Natural Resource Charter (NNRC), said, “Nigeria needs to learn lessons from smaller countries like Trinidad and Tobago, which is a small island country but is the sixth largest producers of LNG.”
While Nigeria seems to be dilly-dallying, Trinidad and Tobago is a good example of a country that has accomplished much with its gas resources. With a small population of 1.4 million and only 11Tcf of proven gas reserves, the country has developed a globally competitive petrochemicals industry.
Today, Trinidad and Tobago is the world’s largest exporter of ammonia and second-largest exporter of methanol leading to this industry contributing significantly to the country’s GDP.
“Time is running out on Nigeria, other countries are competing for investment,” Ajumogobia said.
Victor Eromosele, former general manager finance at NAPIMS and current chairman/CEO of ME Consulting Limited, said Nigeria needs to think big on what to do with its huge gas reserves, thereafter modularise its thinking of gas by starting small. “The time to start is now,” Eromosele said.
Adeoye Adefulu, a partner and head of Odujinrin & Adefulu’s Energy Practice & Real Estate and Mining Team, said there were lots of regulatory clashes in Nigeria’s oil and gas sector, most especially between the NNPC and DPR.
“The philosophy of Nigeria’s regulations needs to be smarter and much more specific on needs and challenges facing the sector,” Adefulu said.
Abdullateef Amodu, publicity secretary at Nigeria Association of Petroleum Explorationist (NAPE) said Nigeria’s oil exploration is effectively dead as Nigeria’s Niger delta is still highly underexplored.
“Nigeria needs to have holistic oil and gas vision that stakeholders can all tie into,” Amodu said at the event.
Emmanuel Anyaeto, head, gas demand and supply at Axxela a fast-growing gas & power Portfolio Company said governments think in terms of electoral cycles and prefer to jump at low hanging fruits.
“Joint Ventures continue to be poorly funded because the government cannot afford to do so. Government revenue has many competing interests ranging from infrastructure, healthcare, and education to paying members of the national assembly,” Anyaeto said. Anyaeto noted that the government can recoup billions by simply stopping JVs which may work for climes such as Saudi Arabia with bigger oil revenues.
Ayodele Oni, energy partner at Bloomfield law practice said gas is a low hanging fruits towards industrialisation in Nigeria however much need to be done in terms of improving the regulations in the sector. “We need to have a philosophy behind the reforms,” Oni said.
Other stakeholders believed the government sector has to be bold about solving challenges such as gas pricing, unreliable gas supply, poor gas infrastructure, power sector liquidity issue, ineffective regulation of the energy value chain, and concentration and control of gas resources within a limited set of license holders in the country.
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.
The discovered gas resources, located in the south-south geographical part of the country, have become mere assets on paper, and they continue to be in the firm control of government bureaucrats whom analysts say are without a clue how to unlock them to energise the economy.
ISAAC ANYAOGU, STEPHEN ONYEKWELU & DIPO OLADEHINDE
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