Despite its over 200 trillion standard cubic feet, scf of gas reserves, Nigeria’s daily gas production dropped to 7,574.68 million metric standard cubic feet, mmscf in 2020, based on data collated from the monthly reports of the Nigerian National Petroleum Corporation, NNPC. By Clever Advertising Year-on-Year, YoY, the output produced by the Joint Ventures, JV, Production Sharing Contracts companies and Nigerian Petroleum Development Company, NPDC, showed a drop of 4.43 per cent compared to 7,918.34 mmscf produced in the corresponding period of 2019. However, on Quarter on Quarter, QoQ, the nation recorded 7,99.93 mmscf in the first quarter (January – March) of 2020, indicating a decrease of 2.69 per cent compared to 8,218.91 produced in the corresponding period of 2019. Similarly, the nation recorded 7,658.64 mmscf in the Second Quarter (April – June) of 2020, showing a decrease of 1.81 per cent compared to 7,799.86 mmscf in the corresponding period of 2019.
It also produced 7,574.92 mmscf in the third quarter (July – September) of 2020, indicating 5.32 per cent decreased compared to 8,000.36 mmscf recorded in the corresponding period of 2019. The nation also produced 7,067.23 mmscf in the fourth quarter (October – December) of 2020, indicating a decrease of 7.67 per cent compared to 7,654.22 mmscf produced in the corresponding period of 2019. Problems Investigation by Energy Vanguard showed that the low output was fuelled by inadequate investment required to increase output for export and domestic utilisation. It also showed that besides gas discovered in the process of oil production, very little has been done in terms of direct gas exploration and production. The limited investment was also partly attributed to the inability of the nation to pass its Petroleum Industry Bill, PIB, which potential investors need to guide their decisions, into law. Implications Commenting on the development, Lead Promoter, Energyhub Nigeria, Dr Felix Amieyeofori, said: “The nation is blessed with huge reserves of natural gas, unfortunately, we have not yet been able to properly harness it for export, thus denying the nation of generating much additional foreign exchange, which has been greatly constrained following the prolonged lull in the global oil market.” Also, a Port Harcourt-based Energy analyst, Mr Bala Zaka, said: “The domestic economy is also gasping for increased utilisation of natural gas in different sectors of the economy, including manufacturing, transport and even power.
“In fact, we need to make more efforts towards the development and commercialisation of our gas to grow the economy, and create many multiplier effects, especially jobs, in the country.” Way forward However, in a communiqué issued at the end of the just-concluded international conference on gas, Mr. Ed Ubong, President, Nigeria Gas Association, NGA, stated: “Nigeria has enough gas resources to meet its demands in the domestic and export market. All stakeholders must work with the government to deliver Nigeria’s gas ambitions over the next decade. Nigeria must enhance the fiscal and operational policies required to attract the right investments to realise the objectives and aspirations outlined within the nation’s gas programmes. “The government is enjoined to urgently resolve legacy debts, payment guarantees and other commercial impediments, including power delivery bottlenecks in the Gas-to-Power programme. “The panellists called for the adjustment of royalties on gas supplied and consumed in the domestic environment to encourage more supplies that catalyse more significant development in the overall domestic economy. “They demanded non-discriminatory pricing mechanisms that offer suppliers equal opportunity for returns on investments and cost-reflective tariff structure across the gas value chain. “There was consensus that the gas supply industry must be anchored on a willing-seller, willing-buyer framework to unlock further investments in gas exploration and delivery infrastructure. “There should be a removal of price controls and concessional gas tariffs for sections of the market that are critical to achieving overall economic growth objectives. “The scope of the National Gas Transportation Network Codes should be expanded to fully cover the domestic gas market in line with provisions already specified by the Department of Petroleum Resources, DPR, which regulates the industry.” Continuing, it stated: “The Central Bank of Nigeria, CBN and other development banks need to prioritise the gas industry underpinned by concessional interest rates and guarantees for dollar-denominated transactions, to assure lender confidence in gas projects. “PENCOM to make the $32 billion pension funds available to Natural Gas investors as priority funding for critical gas infrastructure, to bolster economic diversification and sustained industrialisation in the country. READ ALSO: Petrol subsidy continues in May, says NNPC GMD “The panellists agreed that cost-reflective pricing mechanism, favourable fiscal regime, ease of repatriation of dividend/capital, stable exchange rate, and national industrial policy stability are critical conditions for spurring equity and loan financing in the local gas market. “It was revealed during the sessions that the BOI has a $500 billion funding arrangement with the Bank of China, BOC to finance import equipment for flare gas capture, which requires the intending borrowers to advance about 25 per cent of their funding needs and import their equipment from China. “Similar arrangements with the US Exim Bank are also available for players that want to import their flare capture equipment from the United States. The panels enjoined players to foster good corporate governance, de-risking loans with equity contributions and mapping out clear funding outlines before initiating a project. “The panel agreed that gas- based industries such as fertiliser and cement constitute key consumption centres that could grow the country’s domestic gas consumption and unlock the much-needed economic growth required to take over 90 per cent of Nigerians out of extreme poverty.” It also added: “There is a need to warehouse world-class local capacity to adapt imported technologies for the local conditions to reduce overdependence on Original Equipment Manufacturers, OEMs, improve local content know-how, deepen innovations, and curtail maintenance costs and the overall cost of production.” The conference highlighted the need to create and develop regional infrastructure across the West African economies to deliver gas supplies to markets through various marine, rail, road, and pipeline channels. “They also called for improved regional collaboration on maritime security to arrest the Gulf of Guinea’s rising piracy incidents for safer virtual gas shipping through marine transport. “The process of building industry capacity and retooling professionals from an oil-based economy to a gas-based economy should begin in earnest with the NGA playing a central role.”
