Nigeria Needs $10b Yearly to Achieve Gas Master Plan’s Goals

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To achieve the objectives set out in the Nigerian Gas Master Plan, at least $10 billion yearly investment is required over two to four years period, the President of the Nigerian Gas Association (NGA) Dada Thomas, has said.

The NGA President, who is also the Managing Director and Chief Executive Officer, Frontier Oil Limited, said such investment would create job opportunities for local line pipe manufacturing plants, construction companies and pipeline operators and an annual income of about $0.75 billion.

Dada, who was highlighting the potentials of natural gas and the need to support its exploitation in-country, noted that the domestic gas (domgas) market has grown over the years, but only 13 per cent or 1.01 billion cubic feet (bcf) of total gas production of 7.5 bcf per day is consumed locally while 43 per cent is exported via liquefied natural gas (LNG) and West African Gas Pipeline, 34 per cent used for gas injection and 10 per cent flared.

He said: “The growth in production came about largely by encouragement followed by compulsion. The end result is that Nigeria is only ranked 22nd in production of gas in the world, and we found ourselves in a perfect storm sitting in darkness generating less than five gigawatts (Gw) of grid power while flaring enough gas to generate two to three gigawatts of electricity and power plants are starved of gas. We have only two gas based industries (GBI) and barely any gas transportation infrastructure.

“The bulk of our domgas is consumed by power plants within an illiquid and poorly regulated gas-to-power value chain that is threatening to cause systemic bankruptcy of all parts of the value chain and possibly the banking sector. We, therefore, have to conclude that we haven’t properly exploited our gas resources for domestic use for the benefit of our nation or our people and those brave enough to invest in our country’s development.

“Looking to the future, the forecast demand for gas is ambitious with a target of eight bcf/d to 10 bcf/d in the long term, the bulk (about 60 per cent) of which is planned to be used for power generation. Given the relatively poor performance so far in developing the domgas sector over the years, how then do we propose to achieve these ambitious targets given the various impediments and issues that have bedeviled and continue to plague the domestic gas industry?”

Speaking further on the subject entitled: Domestic gas utilisation in Nigeria : from producers to users, Thomas said no domgas market can exist without the upstream sector consisting of the oil and gas companies that explore, develop and produce the gas from reservoir to the wellhead delivering it to the gas treatment plant inlet gate.

“These companies have to rise up to the challenge of ramping up domgas production from the current level of 1.01bcf/d to the forecast level of 2.5bcf/d over the next five years. The Independent Petroleum Producers Group (IPPG) estimate that this will require initial investments of $6 billion annually over a period of four years dropping to $3 billion annually thereafter in new gas production, processing and transportation infrastructure. The gas requirement is significant and cannot be realised unless gas resources currently untapped are freed up and made available to those willing to develop them,” he added.

To him, within the midstream sector, a number of new initiatives based on traditional gas treatment technologies are now being deployed in Nigeria and will help revolutionise the domgas industry. Citing examples, he noted that a 500 million standard cubic feet per day (mmscf/d) compressed natural gas (CNG) industry could sustain a $1billion per annum industry.

“A 500mmscf/d micro/mini liquefied natural gas (LNG) industry could sustain a $1.6billion per annum industry,” adding that growing liquefied petroleum gas (LPG) consumption from 2kg/capita or 400 metric tonnes per annum to 12kg – 20kg/capita or three to five million metric tonnes per annum, could generate a $10 billion plus industry,” he added.

Source: The Nation

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