How new gas code will fix Nigeria’s pipeline infrastructural deficit

With the flag-off of the National Gas Transportation Network Code (NGTNC) on Monday, stakeholders in the sector are hopeful that new gas code will attract more investment into pipeline infrastructure in the country.

Predicated on the need to use the enormous gas deposits in Nigeria to grow the nation’s economy, the NGTNC applies between gas producers, shippers, and their agents.

Its provisions allow a window of six months for legacy agreements to migrate onto the network code while new and intending agreements are expected to align with the new code.

Sarki Awulu, CEO, Department of Petroleum Resources (DPR), highlighted six major game-changing effects the new code will have in attracting more investment into Nigeria’s pipeline infrastructure.

According to Awulu, the new structure will provide a set of rules that govern the gas transportation system, ensure non-discriminatory access to pipeline system, and guarantee secure, available, reliable and safe gas transmission system.

“The code will attract more investors into pipeline infrastructure,” Awulu said.

Awulu noted the new code will ensure cost-reflective tariffs for pipeline services, support the development of matured gas markets and provide mechanism for effective handling of contractual disputes.

“The new code will also support the development of matured gas markets, and provide mechanism for effective handling of contractual disputes,” Awulu said.

Timipre Sylva, Minister of State for Petroleum Resources, said the NGTNC will deepen the domestic gas market, attract more investments and unleash Nigeria’s potentials of accelerated growth.

“This Code, together with related interventions, will enable improved gas supply to power, growth of Gas Based Industries (GBIs), domestic LNG, LPG and CNG penetration as well as enhance revenue to government and create investment opportunities for our people,” Sylva said.

Nigeria is Africa’s largest oil producer and a strong member of the Organisation of Oil Exporting Countries (OPEC). With around 2.5 million crude oil production capacity, the country has huge gas reserves. According to data from the Nigerian National Petroleum Corporation (NNPC), the country has around 202 trillion cubic feet (tcf) of proven gas reserves plus about 600 tcf unproven gas reserves.

Up till now, this gas had been largely undeveloped with huge chunk flared, and the government-owned Nigerian Gas Company (NGC) has been a sole operator providing pipeline infrastructure in the Nigerian gas market.

Salihu Jamari, managing director, Nigerian Gas Company (NGC), noted that his company has been upgrading its facilities in expectation of the launch of the network code.

“We are making sure that metering is available at every point in the network. The NGC is very much aware of its role in the implementation of the network code,” Jamari stated.

Over the years, the country’s relatively smaller oil reserves have been the major focus for government and international oil companies in the country who find it easier and more profitable to produce oil rather than gas. Government in recent years stepped up its effort to support gas development, grow the economy by opening the gas market through export and encourage domestic use of gas in power generation and household use.