Nigeria gas production to grow in 2016

Nigeria gas production is projected to increase in 2016 according to findings by BusinessDay Research and Intelligence Unit (BRIU).

The country’s natural gas resource is said to be more than twice the quantity of crude oil. It is estimated that Nigeria’s reserve-production ratio is about 125 years compared with that of crude oil of less than 30 years. Based on these two sides of the coin, there is need for more gas to power the electricity sector.

According to Nigerian National Petroleum Corporation (NNPC) monthly petroleum information made available to the public, Nigeria gas production is to grow by 42 percent to 2,107.09 million standard cubic feet (mmscf) in the first half of 2016 from 1,481.4mmscf in the corresponding period in 2015, using the growth rate for the last two years.

Starting from indigenous oil companies operating as marginal field, these are expected to grow gas production by 300 percent in 2016. The NNPC information shows further that marginal field gas production is projected to increase from 23.42mmscf in 2015 to 93.68mmscf in 2016.

Next in magnitude to marginal fields are the indigenous companies operating under Sole Risk/Independent agreement. These are to grow gas production by 171 percent from 116.54mmscf in the half year 2015 to 315.82mmscf in the half-year of 2016.

Considering Joint Venture (JV) and Production Sharing Contract (PSC), PSC gas production is projected to grow by 102 percent to 637.55mmscf in the first half of 2016 from 315.62mmscf in the corresponding period of 2015. For JV, gas production is expected to grow by just 3 percent to 1,052.72mmscf in 2016 from 1,022.06mmscf in 2015.

In terms of contribution to gas production, 68.99 percent of the expected gas production is to come from JV. Next in magnitude to JV is PSC with expected contribution of 21.31 percent to gas production in 2016. Sole Risk/ Independent companies are to contribute 7.87 percent, marginal fields 1.58 percent and Service Contract (Sc) 0.23 percent.

Looking at gas production expectation from the companies’ angle, more is expected from five oil companies – Shell Petroleum Development Company, Nigerian Agip Oil Company, Mobil Producing Unlimited, Chevron Nigeria Limited, and Total Exploration and Production Limited.

The five company analysed are expected to account for a 69 per cent of the total projected gas production of 2,107.09mmscf in 2016.

Shell Petroleum Development Company is projected to have the top spot with total gas production of 453.45mmscf in the half year of 2016.

Nigerian Agip Oil Company is expected to take the second spot with total gas production of 430.89mmscf, while Mobil Producing Unlimited is projected to occupy the third place with gas production of 300.26mmscf. Chevron Nigeria Limited is expected to take the fourth spot in gas production with a total gas production of 132.96mmscf and Total Exploration and Production Limited is projected to occupy the fifth position with a total gas production of 128.32mmscf.

The projected growth was also reflected in 2015 production. A total of 1,481.41mmscf of natural gas was produced in the first part of year 2015. This represents an increase of 24 percent, when compared with 1,198.58mmscf produced in corresponding period in 2014. The increase in gas production was attributed to demand for gas power generation during the period under review.

Considering the fiscal regime contribution to gas production, JV accounted for 68.99 percent of the total gas produced during this period, which is equivalent to 1,022.06mmscf. This indicates an increase of 3 percent compared with 993.82mmscf produced in 2014.

This statistics show a large proportion of the increase recorded in gas production that comes from companies operating under production sharing contract – Sole risk independent companies and Marginal fields. The PSCs production increased 102 percent to 315.62mmscf in 2015 from 155.93mmscf in the corresponding period of 2014.

Sole-Risk independent companies, also known as indigenous companies’ grew gas production by 171 percent to 116.54mmscf in 2015 from 42.99mmscf in 2014, and Marginal Fields’ production grew by 300 percent to 23.42mmscf in 2015 from 5.85mmscf in 2014.

OLOWA PETER