Shoring up gas utilisation, commercialisation for West Africa

West Africa no doubt prides itself as one of the regions that has gas producing countries. Despite this huge advantage, the region falls short in its ability to effectively utilise their gas reserves to the benefit of their people.

The inability of the managers of the economy in the region to strategically utilise and commercialise these abundant gas reserves have given rise to loss of revenue, environmental pollution and degradation.

Industry close watchers observe that absence of necessary policies and fiscal incentives to encourage the development of the industry are amongst the factors hampering the effective utilisation and commercialisation of gas in West Africa.

They disclosed that issues such as low local demand, unattractive gas pricing, cheaper alternatives, political instability, corruption and lack of infrastructure further stretch the realisation of this dream.

Reports by Energy Information Administration (EIA) indicate that West Africa is projected to dominate natural gas production in Sub-Saharan Africa in the long term, accounting for 81 per cent of the region’s natural gas growth by 2040.

Nigeria, according to the EIA, is the 9th largest holder of proved natural gas reserves in the world, holding about 182 trillion cubic feet of proved natural gas reserves, accounting for 82 per cent of the total in Sub-Saharan Africa.

Industry analysts observe that even with this huge gas reserve, not much has been accomplished with respect to the effective exploitation and utilisation of this abundant natural gas reserve of which some of this gas reserves are termed ‘stranded’ whose volume and location are often considered as non-commercial and difficult to exploit.

Experts attributed the non-utilisation and commercialisation of the region’s gas resources to limited commercial demand, saying that the local market is only able to absorb a relatively small percentage of daily production of associated gas.

“Others are unrealistically low gas pricing. It was generally said to be uneconomic to embark on admittedly costly gas utilisation facilities. 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 further disclosed that the issue of the absence of necessary policies and fiscal incentives to encourage the development of the industry, especially in the downstream sector; low liquid hydrocarbon fuel prices which makes industrial and commercial enterprises reluctant to invest funds necessary to convert their energy source to gas.

“There has been little incentive for energy companies to explore specifically for gas due to a lack of fiscal incentives and the high set-up costs and time needed to develop liquefied natural gas (LNG) facilities in order to export gas.

If the government is able to make the investment environment more attractive, the country has massive prospects. “Indeed, industry experts have said that Nigeria’s gas reserves could potentially be high if deliberate steps are taken to explore for gas.

To stimulate investment and grow the gas industry ensuring that it makes meaningful contribution to economic development, analysts say, “Local markets must be created for gas utilisation, while gas prices must be set at commercial levels to stimulate development of gas facilities.

KELECHI EWUZIE