Deepening investment in midstream, downstream gas sector
The constant promise by the federal government through Emmanuel Ibe Kachikwu Minister of State for Petroleum Resources, to take gas as a stand-alone sector away from oil continue to raise the interest of stakeholders in the sector.
Kachikwu at different fora assured industry players and stakeholders in the gas sector that the new national policy on gas would give gas the kind of attention it deserves.
Among the plans of government is to turn Nigeria into a gas-based nation – producing enough gas for her industrialisation and the export market.
In the National gas policy, the domestic market would be made a priority, as government plans to completely cut off gas flaring before 2020 and then monetise the gas business as an alternative to income for the country.
According to Kachikwu, “The draft gas policy promotes a competitive business environment for both current and new investors, articulates our vision for the sector and sets policy goals, strategies and an implementation plan for our medium to long-term targets for gas market development,”.
The Nigeria National Petroleum Corporation (NNPC) said there is an approximately $51 billion investment need in the sector to cover gas exploration, processing, transportation and general infrastructure.
NNPC’s Group Managing Director, Maikanti Baru further disclosed that about $35.4 billion investment will be required in the gas exploration and production activities, power plants projects, fertiliser plants, virtual pipelines and flare gas commercialisation initiatives.
According to him, “Other areas with about $16 billion investment include Free Trade Zones (FTZ) infrastructure development and concessioning, port infrastructure, Central Gas Processing Facilities (CPF), gas transmission, Liquefied Petroleum Gas (LPG) plants, real estate development, pipe milling and local fabrication yards among others.”
A cursory look at the policy, it clearly defines the boundaries between upstream, midstream and downstream sectors, as well as opens good access for investment in midstream assets (processing facilities and transmission systems) which will also be governed by a network code where producers can process and transport their gas to the market across the country.
The gas policy also contain appropriate pricing structure, guarantees for payment, enabling fiscal regimes, host communities engagement, and conducive environment were some of the other enablers for investors to take advantage of the $51 billion gas opportunities.
As laudable as this projections are, operators in the gas sector insists that to grow the midstream and downstream gas sector, government must show some leadership in transforming its plans into reality.
Industry operators insists that while they are willing to drive the sector’s growth, a meaningful investment should however be buoyed by government’s firm commitments.
According to them, financing is possible if issues such as fixing the gaps in the value chain, avoiding policy summersault, honouring sanctity of contracts, stabilisation of the exchange rate, long-term view of fiscal policies are in place.
KELECHI EWUZIE