Aspiration to close gas demand shortfall in 2020 hinge on utilisation end intervention
With75 percent of Nigeria’s power forecast for today and for the future hinged on thermo power plant which derives energy from gas, industry operators have said that to close the 4.7Bcfd gas demand shortfall in 2020, there is the need to also grow the gas industry especially at the utilisation end.
There is no gain saying the fact that growth of the Nigerian gas sector is anchored on growing power sector and the gas-based industries.
Operators observe that the economy is currently largely dependent on thermal power plants which are fuelled by gas adding that to get the power sector right, we need to address issues around sustainability of gas investments and gas availability.
“The Nigerian economy can truly be an investor’s haven if the power sector challenges are holistically addressed”. They said.
According to the International Gas Union, vast opportunities await Nigeria in the gas sector more so as Nigeria is more of a Gas than oil nation going by the quantity of the proven gas reserves in the country which stands at 180 Tcf.
There is no gainsaying that oil and gas is critical to the Nigerian economy as it is the major foreign exchange earner for Nigeria, contributing over 80 percent to government revenues. Therefore, the position of Nigeria in the hydrocarbon landscape underscores the need for local content in-country value addition.
Industry watchers in the oil and gas sector of the economy have called on the managers of the economy to urgently address the lapses in gas infrastructure, funding and debilitating effect of vandalism in the energy sector and resolve hiccups that gas shortage poses as this will encourage investment to grow the economy.
They stated that issue of policy somersault and inconsistency present major challenges in the economy adding that unless this is tackled, investment would be difficult to come by.
Simbi K. Wabote, Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB) at a recent gas conference was quoted to have disclosed that some of the areas where gas has the potential of earning revenue include widespread adoption and utilisation of LPG as preferred fuel for domestic cooking.
The lingering burden of lack of gas
Ibrahim Yusuf, a representative from the Nigerian Gas Processing and Transmission Company Limited while delivering the lead paper on “Impact on the Nigeria economy: Gas and power, the transmission and distribution perspective” at power forum in Lagos observed that despite the huge gas reserved in Nigeria, shortage of gas remain a challenge as NGC cannot meet the increasing demands by customers.
“Although we have huge gas reserves in Nigeria, bringing it out is the challenge. The IOCs are not willing to invest so much on gas”.
Yusuf pointed out that increasing vandalism of oil and gas facilities in the Niger Delta have considerable reduced NGC ability to deliver required gas in the downstream.
He further outlined funding as a major hindrance towards building the required infrastructure to grow the gas to power value chain to grow the economy.
Abdu Mukhtar, Chief Strategist, Dangote group suggested that for this economy to pick up and come out of recession there is a need to intensify our diversification drive away from oil.
Mukhtar observed that lack of gas is threatening the gas to power project adding that the power sector challenges without doubt cascade into other sectors like the manufacturing which affects the economy.
Analysts opine that of the estimated 8 billion scf per day volume of gas produced in Nigeria, 40 percent are tailored towards export, while 13 percent of gas produced is flared.
They are optimistic that Nigeria electricity generation output will increase once the federal government and its other joint venture partners keep up its investment commitment to gas gathering projects which will further achieve zero gas flaring in the country.
According to them, “When the estimated figure of 211.836 billion SCF of gas been flared are converted into power, Nigeria could be generating a sizeable amount of electricity for domestic use.
Industry watchers maintain that a step into achieving this aspiration should start with the introduction of the domestic gas obligation which imposes an obligation on the oil companies to assign certain percentage of the gas being produced for domestic uses.
“Looking at what is going on in the industry, the future is selling our gas domestically because the international prices are on decline”, they said.
Taking a step in the right direction
Israel Aye, Director, Aspen Energy Nigeria Group observe that the over centralisation of power generation or regulation of power is part of the problem we have in Nigeria adding that Nigeria does not need to generate the bulk of energy needed to power the economy from gas sources alone.
Aye opines that the challenge of power in Nigeria currently is that the technology required for the sector to function optimally is not available, adding that the fuel sources whether it is coal, solar or gas are abundantly available in Nigeria, just that the ability to convert these resources efficiently into power is lacking.
According to him, “The problem is not generation; it is an issue of investment. This can be traced to legislature. The sector was entirely locked in with legislation. Hopefully it is opening up now and we hope it opens up more so that money can find its way in so we can see more investment”.
“Nigeria needs to take immediate steps to open up to foreign investment; tackle issue around government monopolies in infrastructure; remove all obstacles to smooth business operations as this will make attract both local and foreign investments”. He said.
He advocated that state should take the lead in the pursuit of embedded power. “Each state should be allowed to lean on the resources readily available to them to generate their own power. They should backed by legislation to manage the generation and distribution of power within their locality”. He said.
Aye further disclosed that PIB should be passed and there is the need to invest in gas processing plants observing that there are frank conversations in terms of fiscal terms that would incentivize investors.
He sounded a note of warning to managers of the economy saying while making progress in the investment end, there is urgent need to look at intervention at the utilisation end particularly with respect to power.
Analysts are of the opinion that that the country is endowed with abundant gas resources and the sector holds huge potentials for unprecedented growth, they are however concerned that the existing legal and regulatory framework, written primarily for oil does not provide robust technical and commercial framework for gas.
They further insist that the gas sector policies will provide Nigeria with the opportunity to harness and get maximum value from its stranded gas resources and also vigorously pursue investment at the utilisation end.
KELECHI EWUZIE