Considering the amount of stranded gas that can be utilised for domestic consumption and the nation’s energy challenges, stakeholders in the gas sector have said gas-fired power generation represents the most economically viable and immediate means to fuel Nigeria’s energy needs.
According to them, most of the gas produced is not channeled for local production due to the pricing regime.
Speaking at a technical symposium on gas utilisation, the Special Adviser to the Minister of State for Petroleum Resources, Dr. Timothy Okon, explained that efforts were being made to address the challenges limiting the utilisation of gas for domestic purposes.
He noted that though extractive industries support frontier economy and not development, frameworks need to be developed to promote a competitive market that encourages the operators to invest.
He explained further that though sector-based pricing was adopted as a form of intervention in some cases to drive consumption and grow critical sectors of the economy, enterprises that utilise gas for commercial purposes should be willing to pay more.
Although the Federal Government is targeting 2021 as the year in which the gap in supply and demand will be substantially bridged, operators note that government policy needs to focus on developing adequate infrastructure, providing enabling commercial terms, settling and preventing future debts related to gas and power supply, and improving the business environment.
According to operators, the current Domestic Supply Obligation (DSO) procedure that allocates arbitrary pricing on gas supplied by the upstream gas producers without considering the viability of such pricing does not work and is a disincentive to gas producers investing in the gas infrastructure required to utilise Nigeria’s vast gas reserves.
President of the National Gas Association (NGA), Mrs Audrey Joe Ezigbo, argued that the gas sector can aid Nigeria’s diversification agenda if government is deliberate about the gas-to-power initiative, especially for industries.
Noting that the 2008 regulations already defined the commercial regulations for the gas sector, Okon added that fiscal abuses bordering on producer cartels and economic hold up as well as regulatory illiteracy should be addressed.
The General Manager, Gas, Seplat Petroleum Development Company Plc, Okechukwu Mba, who represented Austin Avuru, the Chief executive Officer, said SEPLAT contributes about 30 per cent of domestic gas supply in Nigeria.
According to him, in the quest to supply gas to the Nigerian market, the Phase I expansion of 150MMscfd of Oben Gas Plant was completed in 2015, while the Phase II expansion adding 225MMscfd processing capacity was completed in 2016.
He added: “Our current well stock is capable of delivering around 400 MMscfd (gross). We have additional processing capacity available for 3rd party volumes (future tariffing revenue)
“Over $300million has already been invested in Oben Gas Plant Expansion Project. Our Sapele Gas Plant Upgrade and ANOH Project are to add 315MMscfd Capacity by 2020.”
Authored By: Femi Adekoya