Nigeria’s minister of state for petroleum resources, Timipre Sylva, has dispatched his personal cars to turn them into dual-engine capable of running on gas. All retail outlets of Nigeria National Petroleum Corporation (NNPC), the state-owned oil company, have been directed to offer a full complement of gas products as transportation fuels, indicating that the year of gas is fast gathering steam.
The coronavirus pandemic, which has traumatised businesses globally leading to shutdown of factories and farms, has also cratered oil prices to levels not seen in two decades. And s0, after years of treating gas as an irritant in the quest for liquid gold (oil), Nigeria is finally smelling the gas.
Last week, the Ministry of Petroleum Resources held its third Quarter 2020 Ministerial Mandate Performance Scorecard Review session of the minister of state for petroleum resources, the permanent secretary and chief executive officers of agencies as well as other initiatives of the ministry, and the insight provided points to a new national engagement plan with gas.
The Federal Government, through the National Gas Expansion Programme (NGEP) designed to expand domestic gas supply and stimulate demand in-country, is advancing policies that will tackle challenges with Nigeria’s gas sector including poor fiscal terms, lack of market-reflective prices and poor infrastructure, as well as providing opportunities for local companies.
Sylva, in his address, said the ministry has recorded positives in these projects – Nigeria Gas Flare Commercialisation Programme (NGFCP), National Gas Expansion Programme (NGEP), flag-off of the National Gas Transportation Code, Marginal Field Bid Round, flag-off of the construction of the Ajaokuta-Kaduna-Kano (AKK) gas pipeline, and setting-up of a committee on Gas Sector-Wide Review of the Domestic Gas Pricing Framework.
Autogas development (LPG, CNG & LNG) for automobiles
The ministry said plans have reached advanced stages in line with ministerial directive and support for the development of LPG, CNG and LNG colocation in NNPC-owned and operated mega stations in the 36 states and the FCT.
“Under this arrangement retail outlets will offer a full complement of gas products as transportation fuels in addition to existing white products as a cheaper, cleaner and more environmentally-friendly alternatives,” said a speech read by Justice Derefaka, technical adviser to the minister, on behalf of Mohammed Ibrahim, chairman of the NGEP, in the office of the minister of state.
Derefaka said the NNPC and mega retail outlets owners and equipment providers are fully on board in this objective and measures are in place to achieve a roll-out of the programme by end of September 2020 using select NNPC-owned outlets as pilots.
Promotion of conversion initiatives for gas-powered vehicles
The ministry said it is engaging large fleet owners, Nigerian Governors Forum, Local governments, Conversion Companies and dispensing facility owners to collaborate in the conversion and establishment of refueling facilities nationwide leveraging on already existing pipelines and mother stations to reduce the burden of conversion on consumers, which is a major impediment to auto gas development.
To tackle gas facility deficit, companies engaged in virtual gas movement have been mobilized to ensure the development of a virtual gas grid that can serve the emerging domestic gas market and a rollout is expected by October 1.
The ministry has drawn up a dual fuel engine importation and domestic manufacturing policy which if approved will be issued in January 2021 through an executive order.
“This will compel all engine imported or manufactured domestically to comply with the dual-fuel requirement as it is done in many other countries that have made significant progress in autogas utilization. This will imply that all engine imports or manufactured domestically must comply,” the ministry said.
The ministry said that in the days ahead building up to the roll-out, parastatals under the MPR will be presenting designated vehicles for dual fuel conversion.
Abner Ishaku, technical adviser on downstream to the deputy minister who also oversees CNG initiative, said the NGEP has organised series of engagement with major stakeholders: Major Oil Marketing Association of Nigeria (MOMAN), Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), Auto Mobile Assemblers, Nigeria Railway Corporation, and others to discuss amongst stakeholders the use of Compressed Natural Gas as an alternative fuel for Nigerians
Ishaku said the NGEP intends to bring together stakeholders to this discussion to look at CNG from end to end and propose some quick actions which can be immediately deployed with respect to vehicular or any engine prime mover, Mass transits close system and retail outlets that will encourage and also deepen the use of CNG for power by Nigerians.
“We believe that such closed systems and other major urban town transportation network if powered and fueled by CNG will help to reduce the cost of transportation considering the cost of Natural Gas compared to fossil fuels of Premium Motor Spirit (PMS) and Automotive Gas Oil (AGO),” Ishaku said.
Domestic gas use
To deepen gas use locally, the ministry is engaging with the Nigeria LNG Limited (NLNG) for additional 250,000MT currently exported for the domestic market.
It is championing the development of additional production platforms in the Delta-Edo axis by the NPDC SEPLAT ASTAYAVIYAK. The NPDC Oredo production platform is expected to come on board by October 2020.
The Ministry also said it has resuscitated the WRPC LPG production facility and 7km pipeline and secured funding assurance from the NNPC for the project. The additional volumes will ensure an uninterrupted supply of LPG based on the anticipated increase following efforts to trigger local demand.
“A major demand trigger initiative is the establishment of Micro Distribution Centres (MDCs) nationwide to bridge the supply and accessories gap between the market and consumers. Efforts are also at an advanced stage to ensure that some MDCs are in place for the October 1st rollout by the Honorable Minister.
The NGEP committee is seeking to extend the MDC pilot scheme currently existing in some barracks in the FCT to all military and paramilitary barracks nationwide and engage the Managers of the Chevron Escravos gas to secure the commitment of some LPG volumes for the domestic market.
Gas-based I=industries (GBI) revitalisation
The ministry said it is engaging with the Manufacturers Association and NLC on the development of Nigerian Gas based industries from textile manufacturing to production of polymer resins.
The NGEP initiated local production of composite resins (at the Indorama/Eleme Petrochemicals) resulting in 100% availability of local raw materials for the production of LNG, CNG and LPG Cylinders and vessels. In this regard, two composite cylinder manufacturing plants (in Yenegoa and Lagos) are under construction by Rungas Industries.
Nigeria has about 202 trillion cubic feet (Tcf) of proven gas reserves, from around 187 Tcf late last year, valued at over $460billion and about 600 Tcf of unproven gas reserves but only about 25 percent of those reserves are under development, according to Shell.
“The world is gradually turning away from crude oil to gas to drive their economies. Our collective efforts should be putting all machinery in place to make gas a critical catalyst to our economic development,” said Derefaka, who had played a key role in the government policy of deepening local gas consumption.
The development of Nigeria’s vast gas resources provides an opportunity to leverage gas to develop industries that use the commodity as feedstock, to produce methanol and ammonia used in fertilizer production.
Derefaka cited the example of Trinidad & Tobago with only 1.4 million and 11 TCF of proven gas reserves, has developed a globally competitive petrochemicals industry and has become the world’s largest exporter of ammonia and second-largest exporter of methanol leading to this industry contributing significantly to the country’s GDP.
Analysts say Nigeria needs better fiscal and regulatory policies. Over 20 years since the Production Sharing Contracts were started, Nigeria still does not have fiscal terms for gas.
The power sector has proven to be the biggest obstacle to deepening gas investments. The Federal Government enforces price controls on gas provided to legacy plants as a means to keep electricity tariffs low. At least 75 percent of Nigeria’s power is sourced from gas and cheap prices keep the plants running but leave its operators cash-strapped since tariffs do not guarantee commercial return until this current review.
Gas pipelines are inadequate to power available plants and they are often targeted by vandals who break them open in search of crude oil to steal. Power plants are sited away from gas resources. Since 2001, Nigeria has spent billions in building NIPPs with little attention paid to ensuring that required gas quantities would be there when needed.
Experts have urged the government to establish a separate regulator for the gas sector, in the mode of the Nigerian Electricity Regulatory Commission (NERC), to provide a complementary and flawlessly interconnected framework for electricity and natural gas.
This new Gas regulator should be responsible to a collection of stakeholders including IOCs, indigenous suppliers, non-NGC pipeline owners such as there are, IPPs, other major non-IPP gas buyers (fertilizer, cement, heavy industry) and Ministry of Power to create a progressive policy that will spur gas availability and supply.
