Domestic gas demand set to soar fivefold to 10bcf/day by 2020

Going by the wave of reforms in the Nigerian oil and gas sector, demand for domestic gas is expected to grow fivefold to over 10bcf/ day from the current rate of just over 2bcf/day. The current gas requirement for the power sector which is the greatest consumer of domestic gas is two billion standard cubic feet but the sector gets an average of 900 million standard cubic feet. This means that supply to the power generation sub-sector still suffers great gas deficit which has adversely affected power supply in the country. By the time this is achieved both the industrial and power sectors would have drastically reduced their production cost as it would be much easier for fuel supply to get to the business concerns of the economy. According to Chinedu Nebo, the minister of power, the country currently generates four thousand megawatts of power which is grossly inadequate. Sabotage on gas pipelines; however, pose a major threat to meeting the demand target. Growing demand for gas from both the power sector and the industry as a whole is fuelling growth in the domestic sector, with demand for domestic gas set to hit 5bcf/day in 2017, before rising to 10bcf/d by 2020, according to Joseph Dawha, group managing director, Nigerian National Petroleum Corporation (NNPC). “The Federal Government and NNPC have embarked on a very aggressive implementation of the gas master plan to meet the astronomical increase in gas demand,” an NNPC statement quoted Dawha as saying in Abuja. Domestic gas consumption is expanding as a result of the ongoing power sector reforms while gas export which was non-existent prior to 1999, has received a strong boost. Nigeria currently has the world’s ninth biggest gas reserves of about 180tcf but continues to burn about 20 percent of the gas produced, mainly along with crude oil due to the limited domestic market outlets. A lot of investment opportunities abound in the natural gas sector of the Nigerian petroleum industry. The Federal Government’s aspirations for the gas sector include creating new industries out of the old oil industry; capturing economic value and generating as much revenue from gas as from oil. The Federal Government signed an agreement with eight oil companies in November last year, including ExxonMobil, Shell and Seplat for the sup- ply of natural gas to 10 power plants in the country, built to tackle chronic energy supply.