Gas Development key to 40,000MW Attainment, Says Oil Producers

Electricity (2)

For the Federal Government to achieve its 40,000megawatts (mw) power generation target from the current 4,000mw, it must develop its gas resource, experts have said.

The Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry, which consists of exploration and production firms stressed the need to expand domestic gas as a key enabler to power sector growth.

In its presentation, the oil firms said OPTS is the cornerstone of the exploration, development and production of Nigeria’s petroleum resources, adding that in 2016 its 24 members accounted for 90 per cent of Nigeria’s oil and gas production – either in partnership with the Nigerian National Petroleum Corporation (NNPC) or with other local and international lease holders.

The Managing Director of Shell Petroleum Development Company Limited (SPDC) and Country Chairman of Shell Companies in Nigerian (SCiN), Mr. Osagie Okunbor, who represented the OPTS chairman Neff Clef said gas development is key to realising the aspiration of 40mw generation and requires an approximate seven-fold increase in domestic gas supply for power generation alone and even more, if we consider industrial needs. This represents a huge development opportunity for Nigeria’s gas industry, it added.

According to him, the important role of natural gas for the development of our economy cannot be over-emphasised in our drive to become one of the top 20 economies in the world. Identifying and implementing measures that capture the potential of the gas industry requires a deliberate collaborative effort between government and key stakeholders, he added.

He said: “With 181 trillion cubic feet of proven gas reserves, and multiples of this figure in undiscovered gas resources, OPTS believes that Nigeria has the potential to be a gas super-power. These reserves place Nigeria as the largest in Africa and the ninth largest in the world.

“However, only about 25 per cent of those reserves is 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 represent 68 years of 40,000mw compared to today’s power generation of approximately 4,000mw. With the largest proven gas reserves in Africa, Nigeria has the potential to be a gas super-power.”

The group noted that providing enabling commercial and fiscal terms, and ensuring a conducive business environment, which includes providing a secure operations environment, will help in achievement of that level of power generation.

It also noted that the Central Bank of Nigeria (CBN) has taken a commendable step of providing a mechanism for partial repayment of gas invoice arrears. However, since this mechanism was announced in August 2014, power sector gas invoice arrears have actually grown from a reconciled N40 billion of undisputed arrears in December 2014, to about N100 billion according to NNPC’s estimate of May 2016. The current system is simply not working. It is vitally important to settle the outstanding debts and establish bankable credit support facilities for future gas sales. Without these assurances, it is unreasonable to expect investors to commit additional investments to grow domestic gas supply, it added.

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