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Oil & Gas Industry’s Stakeholders State Need for further Investment in the Sector

Stakeholders of the oil and gas industry have highlighted the need to encourage further investments tame the low development of gas reserves in the country.
Nigeria has abundant natural gas reserves of 192 trillion cubic feet with a global ranking of ninth in terms of size, according to the Nigerian National Petroleum Corporation.
At this year’s International Conference and Exhibition of the Nigerian Gas Association in Abuja, the stakeholders, in their presentations, copies of which were made available to newsmen, said gas development was critical to the nation’s growth. The President, Nigerian Gas Association, Mr. Bolaji Osunsanya, said the country’s current gas production could deliver 32,000 megawatts if fully deployed for power.
“In this scenario, we would still be behind India, South Africa and many other developing economies in making sizeable quantity of gas available for domestic electricity consumption. Gas-fuelled generation accounts for only about 2,500MW of current generation.
“Due to poor planning, a further 2,000MW of generating plants are stranded with no gas supply. This would seem to underscore the size of the opportunity that exists to fill this obvious gap.”
Osunsanya said any discussion on gas supply would be incomplete without talking about the delivery infrastructure, the gathering systems, the processing infrastructure and the distribution pipelines.
He said, “Given our stated objective to be a gas-based industrial nation, it is critical that we develop a robust gas infrastructure network to support this objective. Our 2,500km of domestic gas supply pipelines seem pale when compared to a need of about 12,000km.
“There is also a growing concern about the slow pace of the already sanctioned projects within the Gas Infrastructure Blueprint.”
He stressed the need to focus on exploration and production of gas in order to fulfil the domestic gas requirements on a sustained basis, adding that any new bid round for assets must have a specific focus on gas assets and development of gas for domestic utilisation.
The NGA president said, “Today, the commercial terms that apply to gas finds (at least under Production Sharing Contracts) remain a work in progress and do not incentivise the development of gas fields, especially in offshore basins.
“Issues such as ownership of gas discoveries must be fairly negotiated in order to assure that there is a deliberate and concerted effort to develop our gas assets and ensure that it has the desired effect on our economy.”
The Managing Director, Total E&P Nigeria Limited, Mr. Nicolas Terraz, while speaking on ‘Harnessing natural gas; new opportunities for Nigeria’s energy agenda’, said significant challenges remained in several areas.
These, he said, included inadequate infrastructure along the value chain, insufficient pipeline network and increasing vandalism and constrained power generation capacity due to inability to dispatch power to the grid even where sometimes gas was available.
He said, “Upstream joint venture funding shortfalls delay projects including gas development and production projects. But this is being addressed in a creative manner by the NNPC and the JV partners.”
Other challenges, according to him, are the absence of the PSC gas terms and lack of bankable commercial, fiscal and strong regulatory framework that can stimulate new developments.
The Managing Director and Chief Executive Officer, Seplat Petroleum Development Company Plc, Mr. Austin Avuru, said the power supply deficit presented an opportunity to increase gas production and supply.
“Only nine per cent of gas produced is domestically utilised for power generation in Nigeria; 41 per cent of gas produced is exported to the international market, and 10 per cent of gas produced is still being flared (more gas is flared than used for power generation). Re-adjusting the gas mix will strategically position Nigeria for domestic energy security,” he said.
According to him, 80 per cent of power generation will come from gas fired plants, with 12 billion standard cubic feet per day of domestic gas supply required to meet the 40,000MW power generation target by 2020.
Avuru said an increase of 10 billion scfpd in domestic gas supply would be required to achieve the 12 billion scfpd target, adding that Nigeria could produce up to 51,000MW of electricity with its gas reserves.
“Investment of about $10bn per annum is required to develop additional 12 billion scfpd, build gas fired plants and produce additional 36,000 by 2020,” he added.
According to the Group Managing Director, NNPC, Dr. Maikanti Baru, Nigeria has huge potential in its vast natural gas resource.
He put the nation’s current domestic consumption of gas at 1.2 billion scfpd, with export volume of over three billion scfpd.
He said, “To date, over 1000km of major gas pipelines have been laid and inaugurated (comprising ELPS 1, Oben Ajaokuta system and the Obigbo Node to Alscon).
“An additional 470km is presently in construction phase (comprising ELPS II looping and the OB3 gas pipeline) while a further 1400km is in project development phase (comprising the Ajaokuta-Abuja-Kaduna-Kano pipeline, the QIT-ObigboNode-Ukanafun-OB3 pipeline and the ELP-Ilorin-Jebba pipeline) with a view to commencing construction before the end of this year.”
He said with the effort in infrastructural development, the nation hoped to expand its supply capacity and establish an integrated gas pipeline infrastructure grid across the country.

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