Inappropriate pricing, fiscal, regulatory, among others, remain an albatross to Nigeria’s objective of getting optimum value from her huge gas resource. Experts say that until the Federal Government addresses these constraints, optimising the benefits in it to stimulate development will remain a mirage, MUYIWA LUCAS writes.
Nigeria’s proven gas reserves as at January 1, this year, stood at 203.16 trillion standard cubic feet (Tscf), with a potential reserve of 600Tscf, according to the Department of Petroleum Resources (DPR).
Indeed, while the potential to double these figures are inherent, the development of natural gas is believed to be constrained by the absence of fiscal policies, inappropriate gas pricing mechanism, legal and regulatory frameworks and inadequate financing. These uncertainties have had uncomplimentary effects on the gas industry, creating an enabling and reliable fiscal, legal and regulatory environment that will enthrone suitable pricing of gas will ensure the successful and sustainable development of the industry.
Despite these problems, the Nigerian Gas Company (NGC), Shell Nigeria Gas Limited (SNG), Axxela and Falcon Corporation, have remained the major distributors of natural gas.
However, experts said to enable these firms and intending investors make gas play its role as an economic enabler and industrialisation driver, there is an urgent need by the government and policy makers to address the hiccups. This is moreso when it is considered that countries like Qatar are leveraging their gas resources to industrialise and improve their citizens.
Arising from a virtual Business Forum recently, Members of the Nigerian Gas Association (NGA) reiterated the need for natural gas to be given its pride of place in the economy by all, including policy makers. The theme of the forum was “The role of natural gas in post-COVID economic recovery.”
President of NGA, Mrs. Audrey Joe-Ezigbo assured that the association would continue to play its role in the industry by raising strong platforms for policy debate to maximise the benefits of natural gas as a critical factor in development and diversification agenda of the government.
She emphasised the need to build capacity and domesticate the supply chain, reduce imports and create new markets for gas while exploring other funding opportunities in supporting gas as Nigeria’s comparative advantage.
She lamented the impact of COVID-19 in Nigeria’s unprepared economic environment and pointed at the looming recession, rising inflation, dwindling oil earnings, low capacity utilisation. She reiterated that natural gas has risen beyond the status of a commercial product to become a growth driver, energy security product, and enabler for industrialisation, job creation and economic recovery. She maintained that stakeholders have roles to play in using gas for development.
Mr. Justice Derefaka of the Ministry of Petroleum Resources (DPR) confirmed that the world is making the shift in its demand for energy from oil to gas, adding that the untapped gas resources provide a great opportunity for the country to diversify its economy with gas playing a leading role.
The representative of the Managing Director of NLNG, Mr. Tony Attah, the lead speaker, Mr. Adeleye Falade, stressed the opportunities that the COVID-19 pandemic presents to players in the gas industry. He shared the same positive projection of what is to come for the world but added that the new world order would require its energy to be cleaner and more efficient, thereby creating an opportunity for gas to take centre stage.
He noted that countries like Qatar, having built so much prosperity on the foundation of a gas-based economy, it is time for Nigeria to unleash the potential of her gas, he added.
A communiqué at the end of the forum noted that the government should recommit to a robust investment in gas infrastructure and delivery channels that would encourage investors to take initiatives in virtual pipeline solutions to deepen market penetration and grow domestic consumption.
The association pointed out critical success factors for virtual pipeline sustainability, which include pricing mechanism based on market forces; development of skill pools for running the system at various pressure regimes; roles of multiple internal regulators across government agencies; fiscal palliatives and tax regimes. There is need for robust consultation among stakeholders in evolving well-articulated policies that recognise and address the needs of players in various niches of the gas industry, and new tax incentives would be needed to help new and investments in the post-pandemic era.
The Nigerian Content policies should address structural vulnerabilities in the industry by reinforcing efforts to build domestic gas supply chains and capabilities and rise to the challenge of full local content capacity, the communique read. They further noted that there should be an emphasis on the passage of the PIB to address the operating environment and trigger the multiplier effect from the petroleum sector to other areas of the economy.
Also, at a recent webinar organised by the NGA, the Managing Director/Chief Executive Officer (CEO) of Gas Invest Limited, Dr. David Ige, said if there is any commodity that can transform the economy and grow the Gross Domestic Product(GDP) clearly, it is gas and the employment its value chain will create are unimaginable.
“Easily, we are looking at between $7.5 billion and $10 billion annually just by working our gas sector all the way down to the industry,” he said.
Some industrial chiefs who use natural gas to power their machinery also spoke on the importance of natural gas.
According to the Coordinator, Power Generation of Promasidor Nigeria Limited, David Okhimamhe, using natural gas to fire gas engines has improved the power availability, thereby resulting into higher efficiency.
He added that some of switching from a dirty fuel to natural gas include reduction in maintenance cost and carbon emission.
Okhimamhe noted that natural gas has improved the productivity of his company and has increased operational stability and availability because it is our primary source of power.
For the Supply chain Director of Apple & Pears Limited, Sayed Azize, apart from the higher efficiency of our machinery due to use of gas, cost wise, natural gas is quite cheaper, cleaner fuel for our machines with reduced engine maintenance as against alternative fuel sources.
He noted that gas availability has led to greater factory productivity and reduced downtime. On how natural gas has helped reduce the firm’s carbon footprint and improve the sustainability of business, Azize said gas has less impact on the environment due to reduced carbon emission which is better and more sustainable for the environment.
However, he identified some of the challenges the company experienced regarding access to natural gas to its operations to include seldom low pressure, which leads to shift to alternative fuel but noted that gas availability has been quite commendable.
Source: The Nation