New gas policy creates $51bn investment opportunities in sector
Nigeria’s latest gas policy encapsulated in Ibe Kachikwu’s 7Big Wins has created $51 billion worth of investment opportunities in gas processing, transmission and general infrastructure in midstream and downstream operations of the sector.
Nigeria’s epileptic power supply has created opportunities to build more power plants, as the current 22 have not assuaged energy needs. Gas exploration and production activities, commercialisation of flared gas, virtual pipeline network, fertiliser plants have created a $35.4 billion investment opportunity.
In downstream operations, pipe milling and fabrication yards, real estate development, construction of Liquefied Petroleum Gas Plants, Gas Transmission pipelines, port infrastructure and development of free trade zones could be worth up to $16 billion in investments.
Maikanti Baru, Nigerian National Petroleum Corporation (NNPC) group managing director, in a presentation at the 10th Nigerian Gas Conference and Exhibition in Abuja, said the new gas policy had been able to create this opportunity by clearly defining the boundaries between upstream, midstream and downstream.
Enablers of these investment opportunities, according to Baru, are clearly defined boundaries between upstream, midstream and downstream operations, open access for midstream assets including processing facilities and pipelines, pricing, fiscal regimes and host community engagement.
“This pragmatic roadmap will grow power generation capacity by at least three-folds within the next four years as growth of the Nigerian Gas sector is anchored on growing power sector and gas based industries,” Baru said.
President Muhammadu Buhari had on October 27 unveiled what the petroleum ministry called the ‘7Big Wins’ to form the basis for policy in the sector for the short-term, mid-term and long-term.
Kachikwu, minister of state for petroleum resources, said the new policy was different from others previously created for the sector.
“The difference with this one is basically the KPI setting. How do we deliver on very specific milestones; most of the plans we intend to see in the long term, medium term strategic potential expectations,” he told BusinessDay in an interview published this week.
He further said, “What we have done for each of these specific items is for example if you are dealing with the public regulations, we tell you the three, four things we should deliver; the petroleum policy, the gas policy and so on. We will work with the National Assembly to deliver the Petroleum Industry Bill. And a lot of the targets in the 7bigwins are executive driven.”
Industry stakeholders however say that key to unlocking these investment opportunities is for government to develop a gas policy that will provide enabling commercial and fiscal terms, develop adequate infrastructure and repay outstanding gas invoice arrears owed gas companies.
Other measures include ensuring sufficient funding for gas development and promoting a conducive business environment to attract investments for reliable operations.
“Nigeria has the world’s 9th largest gas reserves but ranks 17th on production demonstrating the vast untapped potential that exists in the country,” Clay Neff, chairman of Oil Producers Trade Section, said.
He further said that unlocking Nigeria’s gas potential requires continued collaboration between key stakeholders and the government.
“The Gas Sector has a lot of potentials of being a major revenue earner for the Government similar to the oil sector if it is fully developed,” Simbi Wabote, executive Secretary, Nigerian Content Development Monitoring Board (NCDMB), said.