Treading the path to solve lingering burden of gas
The unfavourable business environment has over the years discouraged international oil companies from investing their money in the development of gas.
Despite the huge gas reserve in Nigeria, shortage of gas remains a challenge with Nigeria Gas Company (NGC) cannot meet the increasing demands by customers as lack of investment has consistently slowed the process of gas production.
Industry watchers pointed out that increasing vandalism of gas facilities in the Niger Delta have considerable reduced NGC ability to deliver required gas in the downstream.
According to experts, funding is also a major hiccups towards building the required infrastructure to grow the gas-to-power value chain to grow the economy.
Industry operators observe that lack of gas is threatening key sectors of the economy such as the power sector which also cascade into other sectors like the manufacturing which affects the economy.
Analysts opine that of the estimated 8 billion scf per day volume of gas produced in Nigeria, 40 percent are tailored towards export, while 13 percent of gas produced is flared. Nigeria is one of the leading countries with the highest gas flaring activity.
According to them, “When the estimated figure of 211.836 billion SCF of gas been flared are utilised appropriately, Nigeria could would be better for it.
Industry watchers maintain that a step into achieving this aspiration should start with the introduction of the domestic gas obligation which imposes an obligation on the oil companies to assign certain percentage of the gas being produced for domestic uses.
“Looking at what is going on in the industry, the future is selling our gas domestically because the international prices are in decline”, they said.
Israel Aye, Director, Aspen Energy Nigeria Group observe that the challenge of gas in Nigeria currently is that the technology required for the sector to function optimally is not available, adding that gas is abundantly available in Nigeria, just that the ability to extract these resources efficiently is lacking.
According to him, “It is an issue of investment. This can be traced to legislature. The sector was entirely locked in with legislation. Hopefully it is opening up now and we hope it opens up more so that money can find its way in so we can see more investment”.
“Nigeria needs to take immediate steps to open up to foreign investment; tackle issue around government monopolies in infrastructure; remove all obstacles to smooth business operations as this will attract both local and foreign investments”. He said.
Aye further disclosed that there should be no more delay in the implementation of PIB because there is need to invest in gas processing plants observing that there are frank conversations in terms of fiscal terms that would incentivize investors.
He sounded a note of warning to managers of the economy saying that while making progress in the investment end, there is urgent need to look at intervention at the utilisation end particularly with respect to power.
Analysts are of the opinion that that the country is endowed with abundant gas resources and the sector holds huge potentials for unprecedented growth, they are however concerned that the existing legal and regulatory framework, written primarily for oil does not provide robust technical and commercial framework for gas.
They further insist that the gas sector policies will provide Nigeria with the opportunity to harness and get maximum value from its stranded gas resources and also vigorously pursue investment at the utilisation end.
KELECHI EWUZIE