Diversification of the nation’s sources of gas supply
The recent militant attacks on oil and gas facilities have exposed the fragility of the Nigeria’s energy security. It also exposed the inflexibility of our sources of gas supply.
Gas demand exceeds supply, causing a gross shortfall in power generation. At least 50 per cent of Nigeria’s power generating facilities is mostly thermal which use gas. Due to lack of gas, majority of gas-powered stations have been idle over the years while those working operate at sub-optimal levels.
Between May 27 and June 13, 2016 (18 days), the country’s power sector lost an average of N2bn daily as a result of different challenges, with gas accounting for over 85 per cent of the constraints. Industry figures obtained from the power ministry showed that the quantum of electricity lost as a result of gas constraint was between 3,483 megawatts and 4,031MW during the captured duration.
The severe power loss due to gas constraint warranted a plunge in the amount of average energy sent out to power consumers within the review period, as figures showed that this was between 2,077MWh/h and 2,774MWh/h.
There is need for us to have alternative supply of natural gas. We cannot rely on the Niger Delta alone. A number of options should be considered to diversify the nation’s sources of gas supply. There is a need for us to have gas storage. The country needs to explore the gas reserves in the inland basins. There is a lot of gas in the inland basins. These gas reserves could lend themselves to some small power plants. We should be flexible enough and explore other sources of gas rather than sole reliance on the Niger Delta that is increasingly becoming unstable and unreliable.
The inland basins in the country include the Anambra Basin, the lower, middle, and upper Benue trough, the south eastern sector of the Chad Basin, the Mid-Niger (Bida) Basin, and the Sokoto Basin. It is also time we considered developing gas infrastructure to explore gas in the offshore.
There is need to include regasification of liquefied natural gas in the mix as a strategic intervention for alternative gas supply in case of any outage of pipeline, and the possibility of installing storage for security of supply and to hedge against contract risk.
It is urgent that the country ensures delivery of the short-term projects by the Nigerian Petroleum Development Company and International Oil Companies; complete Escravos-Lagos Pipeline II and OB3 gas pipeline projects, and secure funding to actualise the identified upstream gas development that will enable additional seven billion standard cubic feet per day of gas supply to meet the projected demand by 2020.
A high government official said at a recent conference of the Nigerian Gas Association that gas terms were currently being worked on for Production Sharing Contracts concessions to explore the huge offshore reserves in the country. That is commendable.
We have talked about the huge gas reserves for such a long time that continued talks without action is boring the vast majority of Nigerians. This paper supports every positive step taken by government to develop alternative sources of gas supply for power generation and industry in the country. Yesterday is even too late for that.