Nigeria’s Draft Gas Policy Aims to Attract Global Investment in Huge Sector

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With proven gas reserves of about 188-trillion cubic feet of gas, Nigeria undoubtedly has the largest gas reserves in Africa and the ninth-largest in the world. This explains why, though renowned for its oil production capabilities, Nigeria is typically described as a gas province with a drop of oil.

The federal government of Nigeria has decided to move Nigeria from a crude oil export-based economy to an attractive, gas-based industrial economy, and so the government issued a draft national gas policy in October.

The gas policy, which seeks to drive the institutional, legal, regulatory and commercial reform necessary to attract investment into the gas sector, appears to be an improvement on the 2008 government-issued gas master plan. Given that the international trade of gas has become extremely competitive, the thrust of the gas policy, which is aimed at optimising the development of gas in Nigeria, is rather timely.

The gas policy mainly proposes new legislation to regulate the gas industry, as well as the treatment of gas on a stand-alone basis. As recommended by the gas policy, the new legislation would provide for a simplified licensing regimen, which would regulate the licensing of operators throughout the entire value chain of gas exploitation, including constructing and operating gas processing plants, liquefaction plants, gas storage facilities, transportation pipelines, transportation network operation, distribution networks, and the wholesale and retail trading of gas.

The new legislation would ensure the separation of the upstream gas sector from midstream gas sector, with the aim of specifically focusing on the development of the midstream and downstream sectors of the gas sector.

In order to reduce regulatory overlaps, all existing regulatory agencies that currently regulate oil and gas in Nigeria would be consolidated into a single petroleum regulatory agency known as the regulator.

The regulator would be in charge of the economic and technical regulation of the gas sector, and would have licensing, investigative, monitoring and dispute resolution powers. The gas policy provides that there will also be an investment promotion office, which shall be a single point of first contact for investors, for the purposes of understanding the investment opportunities in the petroleum sector.

However, in order for history not to be repeated, the government must ensure that it engages the legislature on the gas policy and the very important bearing it has on the economy, with clear direction that the relevant legislation be passed efficiently and properly.

While I appreciate the reasoning behind a single regulator for the entire petroleum industry (as the establishment of a unified regulator and the formulation of a holistic regulatory framework for the petroleum industry will help to reduce regulatory duplicity, uncertainty, costs and delays that bedevil the current regulatory regime), I believe that given the importance of the development of gas in Nigeria, there should be separate regulators. One would deal with oil alone and the other with gas only. This would fast-track the development of a gas industry, which is separate and distinct from an oil industry.

Source: BusinessDay


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