Nigeria has proven gas reserves of 182 trillion cubic feet (Tcf), making it the world’s 9th largest reserves of gas, and it is being touted that the undiscovered potential is even greater at a conservative 600 Tcf.
In line with the country’s resolve to become a major player in the international gas market as well as lay a solid framework gas infrastructure expansion within the domestic market, the Nigerian Gas Master Plan was conceived.
Approved in February 2008, the Gas Master Plan was designed to turn the enormous gas reserves in the country into a viable economic vehicle as the key trigger that will revolutionise the economy. It is a guide for the commercial exploitation and management of Nigeria’s gas sector. It aims at growing the Nigerian economy with gas by pursuing three key strategies: stimulate the multiplier effect of gas in the domestic economy; position Nigeria competitively in high value export markets; and guarantee the long-term energy security of Nigeria. The policy is designed to assure gas availability for the growing gas demands driven by rising gas prices, power sector reforms and investor confidence in Nigeria.
Progress has been made, no doubt, with the implementation of the Gas Master Plan as it has opened up vast opportunities for investors in various areas. The continued growth in gas production and utilisation with a corresponding decline in flare volumes attests to industry’s response to the Gas Master Plan. Modest achievements have also been made in the pipeline network as there have been upgrades and contracts have been awarded to expand the network.
Some of the NGMP’s targets of having gas producers reserve specified quantity of gas for domestic use are being fulfilled and the pricing regime also seems to be working slightly well as domestic gas prices seem to be moving towards being commercial and cost-reflective.
Opportunities, however, still abound for investment in pipeline construction system, gas gathering and processing. Opportunities also exist in the areas of financial services, gas transmission pipelines, pipe milling and fabrication yards, upstream gas development, Liquefied Natural Gas (LNG) and Liquefied Petroleum Gas (LPG) plants and gas processing facility/gas-based manufacturing industries.
But there are challenges. These include funding and lack of clarity, particularly regarding some commercial and technical issues, sabotage, corruption and the principal-agency principle.
Furthermore, the pace of investment in gas field development to boost gas production has not matched investment in power generation assets. And inadequate investment in gas infrastructure has affected the supply of gas for domestic use, particularly for power generation. The power sector is expected to require 3.5 billion cubic feet per day (bcf/d) over the next three years and could require more than 5 bcfd when some of the power plants being privatised under the National Integrated Power Project (NIPP) scheme are completed, according to Ecobank Energy, Oil and Gas Research.
Gas supply to power plants has over the years been a big challenge, with low pricing said to be discouraging gas suppliers from servicing the power sector as well as hampering further investments in gas development.
The power sector can also help improve the gas subsector as demand for gas by power generation companies who are willing to pay commercial rates can set the tone for a positive gas revolution. The power sector can create a demand pull for gas and also help better achieve the primary aim of the plan, which is to have the country benefit from its gas advantage.
For Nigeria to achieve rapid development, therefore, the Gas Master Plan must be revisited and effectively implemented.