Frontier Oil calls for better deals for indigenous gas companies

The federal government has been called upon to immediately engage the indigenous gas companies on ways of boosting gas production if the country must meet its power and other gas related needs.

Dada Thomas, Chief Executive Officer of Frontier Oil Limited, made the call in Lagos at the annual conference of the National Association of Energy Correspondents (NAEC) 2015 themed “Tackling gas supply challenges to arrest power crisis”.

According to him, “some 182tcf (trillion cubic feet) of gas is in Nigeria waiting to be developed. What is lacking and urgently required are the political will, enabling policy, commercial and regulatory framework to unleash the true potential of gas to the benefit of all Nigerians.

He said that the future for gas and gas-to-power in Nigeria is bright and called on the government to grant the kind of incentives it did for the International Oil Companies (IOCs) in the past to the indigenous operators who contribute over 53 per cent of local gas production in Nigeria.

“I strongly believe that the federal government should incentivize indigenous operators to undertake domestic gas projects which will help Nigeria meet its power and other gas related requirements. If the Government could give incentives to IOCs in the past then surely it is only fair and equitable that they also give similar incentives to the indigenous operators,” Thomas continued.

He informed that the highly successful Bonny NLNG project by the Shell-led Joint Venture, the Chevron Escravos Gas to Liquids project and similar projects were all given incentives to ensure these projects came to fruition.

He also condemned the current gas prices in Nigeria describing it as lower what is obtainable in markets around the world. This, according to him, has made the gas business less attractive than the oil business for more than 40 years.

He said that the solution to this is “for the gas transactions to be based on a willing-buyer-willing-seller market-driven commercial platform in which the government is removed from regulating the commercial transactions between interested parties.”

He recalled that although the federal government increased baseline gas price to the power sector to a total of $3.3 per thousand standard cubic feet in 2014, the gas producers, transporters and end users are yet to actualise the new pricing regime as the necessary modalities were not put in place for the implementation of this price regime.

Thomas also hinted on the need for Nigeria to rapidly roll out a collaborative gas distribution system between the private sector and the government, which would be led by the private sector, and based on an open access and economic tariff basis. This, according to him, would enable gas producer’s tie-in into the nearest pipeline and reduce the security challenges facing gas distribution in the country.

FRANK UZUEGBUNAM