Strengthening the gains of gas sector investment

Nigeria is one of the top ten nations in the world with huge natural gas reserves. Nigeria’s gas reserve is estimated to be 187 trillion standard cubic feet of gas (tscf). A cursory look at the gas industry in Nigeria indicate a fast growing sector as strong economic incentives abound for industries to switch to natural gas.

The current gas supply is enough to support about 5 giga watts (GW) of power generating capacity. Nigeria’s gas reserves are about three times the value of her crude oil reserves. The largest natural gas initiative in Nigeria is the Nigerian Liquefied Natural Gas project which is operated by several foreign oil companies and the Nigerian National Petroleum Corporation (NNPC).

Analysts observe that previous focus on producing natural gas mainly for export (LNG) is gradually being replaced with one that also accommodates gas production for domestic use. This they noted has seen modest achievements in gas production so far.

From all indication, Nigeria remains very strong in terms of gas production as production has not dropped by any significant margin since the global crude oil price drop started.

Industry analysts are of the view that Nigeria’s gas development in the medium term could derive much from local demands as from export, if not in volume but in value.

They are optimistic that the quantum value gain from the combined price increase and the demand from the power and industrial sector will outstrip LNG which will remain constrained by new supplies into the global market from unconventional gas.

While it is not difficult to decipher that ultilisation of gas has assumed a new dimension for both economic and technological development this is even made manifest in business decisions as industries especially are seriously embracing gas as alternative source of energy generation with the recent shortfall in electricity.

Industry close watchers are of the view that gas projects will become more profitable if indigenous companies are given access, stressing that it will be easier for local companies with proven track records to attract investors to execute projects that can unlock gas for Nigeria.

They maintain that the infrastructure distributing gas around the country is poor and there need to be a public private partnership in growing this infrastructure because the molecule of gas are over there in the Niger delta while the largest consumer of gas are in the south west and you have to connect the two.

According to them, “Government is doing a great job in prioritising power generation in Nigeria and utilising domestic natural gas.

Analysts say government decision to connect the dots by investing not only in power plants, but also the gas fields and the transmission and distribution networks is very important to encourage additional private investment in the sector.

They insist that the key policy intervention that would be a game changer would be to reduce the retail price of gas to industry to a competitive level, which would foster significant industrial growth.

Analysts believe that achieving the desire result in local gas supply or the lack of it will remain a very sensitive issue with government involvement in unrealistic prices.

They insist that to achieve the local gas demand projection, the domestic market must be made attractive to investors who need to invest huge capital upfront in gas processing.

KELECHI EWUZIE