New dawn for Nigeria’s gas sector, as experts optimistic on policy speeding up diversification

Emmanuel Ibeh Kachikwu, Nigeria’s deputy minister of petroleum resources, submitted that policy on the oil and gas sector was already eliciting positive response from industry stakeholders, as they argue the policy would open up the sector for various forms of investments.
Aside the investment aspect‎, key stakeholders in the oil and Gas sector have also argued that Nigeria’s persistent problem in the power sector arising from persistent challenges in gas pricing and other assumptions could be properly addressed with a proper policy framework.
“When we talk about the diversification, we are not just talking about the agricultural sector. This is a sectoral policy that has the capacity to turn around our investments fortunes, and attract huge investments in terms of value addition,” Adeola Adenikinju, director centre for Petroleum, Energy Economy & Law at the University of Ibadan told BusinessDay via telephone.
According to the Energy Expert,”50% of our gas is Associated Petroleum Gas, and with the foundation for proper governance structure laid by the deputy Minister, granted there are no over-reaching bureaucracy, we are optimistic Nigeria could ride on the gas sector to take off economic diversification.
“Gas flaring would also be addressed minimally, as the sectoral policy would address key causes of flaring and even push flarers to invest in the gas sector. They key point is that value addition in the gas sector would be opened up for investment.
He also pointed out that Nigeria’s power sector would be positively impacted, as there would be sufficient gas to supply to the grid for efficient power supply.

Also speaking, Ernest Mupwaya, the Managing director of Abuja Electricity Distribution Company, AEDC also expressed optimism that the sectoral policy on the gas sector could address persistent cost-reflective tariff issue that characterised gas prising in the power sector.
Nevertheless, a statement issued by the Ministry of Petroleum on Wednesday while referring to the 7 Big wins initiative policy-document of the Federal Government for the short and Medium Term Priorities to grow Nigeria’s Oil & Gas Industry 2015-2019 sector quoted the minister saying that “The policy’s implementation strategy would shift focus from government built infrastructure to investor built infrastructure”
The implementation strategy would encourage the use of Nigerian personnel with requisite skills on Gas infrastructure projects, where capacity exists, the statement said.
“Part the short term benefit, the seven bigwigs is to incentivise the building of critical infrastructure to supply gas to and from and Eastern Part of Nigeria to the Western and Northern parts of the country”
It further states that, “It would create a regulatory framework for commercial pipeline investment through clear tariff methodology and fiscal rules of general applications. Also, the Medium term objectives focuses on,” Increase domestic gas demand and improve integration of gas into domestic economy; achieve National Energy Security, and stimulating domestic economic growth with substantial reduction in electricity cost and cost of doing business”
‎Notably, the Policy articulates the vision of the Federal Government of Nigeria, sets goals, strategies and an implementation plan for the introduction of an appropriate institutional, legal, regulatory and commercial framework for the gas sector.
‎Kachikwu also highlighted the need to have a stream of revenues between petroleum and gas in order to see an improvement in the Nation’s economy and leverage on opportunities for gains from the oil and gas sector.
He notes further that the policy will be reviewed and updated periodically to ensure consistency in Government policy objectives at all times,while adding that the gas policy intends to move Nigeria from an oil-based to an oil and gas-based industrial economy which will be driven by the core principles as shown below:
Key characteristics of the policy is that, Kachikwu explained include: “To separate the respective roles and responsibilities of government and the private sector;‎establish a single independent petroleum regulatory authority;‎implement full legal separation of the upstream from the midstream;‎implement full legal separation of gas infrastructure ownership and operations from gas trading; realise more of the LNG international downstream value;‎pursue a project-based, rather than a centrally-planned domestic gas development approach;‎make a strong maintenance and safety culture a priority;‎implement international best practice for environmental protection; establish strong linkages with electric power, agriculture, transport and industrial sectors; establish payment discipline throughout the energy chain, and honour stability of contract terms; by ‎ensuring security of assets ensure compliance with the Nigerian Content Act.

HARRISON EDEH, ABUJA