Restructure strategy in gas sector, the way to go for West Africa

West Africa region till date continues to grapple with the challenge of harnessing the enormous gas resources and potential of the region for the common good government, investors, and neighbouring states.

Gas production in the West Africa region is mostly linked to the production of oil. This “associated gas” is separated from oil at flow stations and more than 70 percent of it is simply flared. Current estimates show that of the gas produce across the region, larger percentages are flared with Nigeria leading the pack.

According to industry sector report, Nigeria flares a staggering volume of gas daily. Nigeria has the dubious distinction of being the world’s greatest gas flaring country. The gas flared daily is said to be sufficient to meet the energy requirements of a small industrialised nation.

Those who know in the gas sector opine that the unfortunate state of affairs as it relates to gas flaring in Nigeria has led to limited commercial demand and unrealistically low gas pricing. On the export front, Nigeria is far from the major international gas markets, the sub-regional market is not attractive, hence, exports are limited to liquefied gas transported by sea, which is an expensive process.

Analysts observe also that absence of necessary policies and fiscal incentives to encourage the development of the industry, especially in the downstream sector has resulted in low liquid hydrocarbon fuel prices which make industrial and commercial enterprises, reluctant to invest funds necessary to convert their energy source to gas.

The various actions by governments in West Africa in the past pose major investment disincentives leading to the flight of foreign investment from the region.

According to industry watchers in the West Africa gas space, lack of infrastructure and the deterioration of existing infrastructure, political instability, insecurity and the break down in the rule of law, inadequate government funding necessary to attain planned growth and development of the industry among other has stifle growth of the gas sector.

West Africa as a region as a matter of urgency must strive to attain zero gas flaring status sooner rather than later earnestly promote the production and utilisation of her abundant gas reserves and to improve the business and political environment of the region in order to attract, and keep, both local investment and foreign direct investment.

As is usually the case, there are many ways of achieving the desired objective. These are policy issues, which will gradually be resolved through much debate and consultation by government, technical experts and all the stakeholders in the industry.

Investor confidence must be restored in order to attract investment through business friendly policies, improved services, efficient administration of government agencies, improvements in the administration of justice system and the eradication of corruption.

According to analysts, “What is less certain however is the manner in which the gas industry is to be structured as far as the local gas distribution is concerned. This is an area in which opinions differ and where several alternatives are available”.

Capital investment facilities to deliver associated gas in usable form at utilisation or designated custody transfer points will be treated for fiscal purposes as part of the capital investment for oil development.

KELECHI EWUZIE