Natural gas reserves capable of generating 40,000 megawatts of electricity for Nigeria have remained idle as several factors continue to hamper investments by oil companies in the business, our correspondent has learnt.
Despite being home to Africa’s largest natural gas reserves, the country has one of the lowest power generation levels per person in the world.
Latest figures from the Department of Petroleum Resources showed that the nation’s natural gas reserves had increased from about 189 trillion cubic feet to 192Tcf as of January 1, 2016, with potential for up to 600Tcf.
The Director-General, DPR, Mr. Mordecai Ladan, noted that despite the abundant reserve base, the domestic sector was relatively underdeveloped and the country had yet to fully benefit from the natural gas endowment.
The Chairman, Oil Producers Trade Section and Managing Director, Chevron Nigeria Limited, Mr. Clay Neff, said, “Only about 25 per cent of those reserves are being produced or under development today. The remaining 135 trillion cubic feet of proven gas is not associated with any planned development. And there is virtually no active exploration in search of new gas reserves.
“The total power potential of these discovered but undeveloped reserves represents 68 years of 40,000 MW compared to today’s power generation of approximately 4,000 MW.”
He said since 2010, the oil and gas industry had typically received about $6bn per year less than required to fully implement its joint venture business plans, which included gas developments, as a result of the inability of the Nigerian National Petroleum Corporation to meet its share of funding.
“The persistent shortfall in funding is constraining growth as significant number of viable projects cannot progress,” Neff said.
He said to achieve the desired increase in domestic gas supplies, it was critical to develop adequate infrastructure, repay outstanding gas invoice arrears, ensure sufficient funding for gas development, provide enabling commercial and fiscal terms, and ensure conducive business environment.
The OPTS chairman also said, “Government policy should be directed at striking the right balance between seeing gas as a catalyst to drive economic development and as a commodity for revenue generation. This balance is necessary to encourage the required investments in gas development.
“When unlocked, these abundant resources can boost Nigeria’s economy by improving electricity generation and create jobs and new industries for fertilisers, methanol and plastics.”
Neff said there must be a solid tax and legal framework that would lead to stable laws and policies in order to attract the required massive investments.
Shell Petroleum Development Company of Nigeria Limited had recently said lack of adequate joint-venture funding had delayed the planned start-up dates for two major gas-gathering projects, Forcados Yokri Integrated Project and Southern Swamp Associated Gas-Gathering Solutions.