Projected increase in gas demand to boost Nigeria’s power sector by 2025

With an anticipated 7.2 billion standard cubic feet growth in domestic gas demand by 2025, the development prospect for the Nigerian power sector looks brighter, particularly as natural gas is expected to be the fastest growing major fuel source as demand increases, industry watchers have projected.

The expectation, according to analysts, is that natural gas will account for more than one quarter of all energy needs by 2025. Nigeria currently produces an estimated 7 billion scf per day and accounts for an estimated 182 trillion scf of gas reserve.

They believe that future energy will be supported by more efficient energy-saving practices and technologies, increased use of less-carbon-intensive fuels such as natural gas, nuclear and renewables as well as the continued development of technology advances to develop new energy sources.

According to analysts, the concretisation of Nigeria’s gas ambitions will however depend on the future development of a significant upstream and downstream gas infrastructure.

In the view of Oladotun Isiaka, general manager, Deepwater Operation and Joint Interest, Esso Exploration and Production Nigeria, energy used for power generation will continue to be the largest component of global demand.

Isiaka observes that the increased energy demand will be driven by population growth, improved living standards and expanded urbanisation.

Nigeria with huge natural gas reserve stands to benefits from increased capacity production, industry watchers insist, saying natural gas has the potential to engender rapid positive growth and enormous impact in the overall economy of the nation.

Dada Thomas, managing director, Frontier Oil Limited, also observes that the pricing structure and the nature of contracts remain a significant obstacle to the development of natural gas in Nigeria, saying there is a need for a standardisation and harmonisation of the agreements.

Thomas also believes that the only incentive for indigenous companies willing to continue to invest in gas for domestic use is if government provides an enabling environment.

Analysts argue that the absence of incentives to encourage investment in key infrastructure to boost local production and sales of the product to consumers must occupy a pride of place in government priority list.

They maintain that while it is not difficult to decipher that utilisation of gas has assumed a new dimension for both economic and technological development, they stress that achieving the desired result in local gas supply or the lack of it will remain a very sensitive issue with government involvement in unrealistic prices.

Joseph Eziegbo, chief operating officer, Falcon Corporation Limited, observes that Nigeria gas reserves is believed to be higher than oil reserves, saying that as the second largest economy by GDP, Nigeria will get the full benefit of this if beyond eliminating flares, the government encourages investment in aggregating the non-Associated Gas (NAG) resources into usable forms for the overall benefit of the nation’s economy.

In the ranking of world proven natural gas reserves, Nigeria is the largest in Africa and the seventh globally. Nigeria currently produces an estimated 7 billion scf per day and account for an estimated 182 trillion scf of gas reserves.

Eziegbo in a recent interview with BusinessDay said power and fuel costs traditionally constitute one of the highest single components of the overheads of the industrial sector worldwide.

According to Eziegbo, “Our gas reserves are believed to be higher than our oil reserves. However, we will not get the full benefit of this if beyond eliminating flares, we do not invest in aggregating our non-Associated Gas (NAG) resources into usable forms for the overall benefit of the nation’s economy.”

Saidu Mohammed, chief operating officer, Gas and Power Companies, NNPC, was quoted to have said recently that government was committed towards the implementation of the gas master plan.

Mohammed said the aspirations of the Nigeria gas master plan were to reposition the country in the shortest possible time as a regional gas supply hub with concurrent presence in the domestic, regional and export market.