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Optimising gas for national development

Nigeria has intensified moves to deepen gas investment and boost revenue from the commodity following the many challenges facing global oil industry with the Nigerian National Petroleum Corporation (NNPC) spearheading the task. ADEOLA YUSUF reports


President Muhammadu Buhari, it was, who in December 2019, first declared the year 2020 as the year of gas. Buhari, the substantive Minister of Petroleum Resources, spoke through the Minister of State for Petroleum Resources, Timipre Sylva, at a global forum on gas development. Among the key priorities, Buhari highlighted, was the completion of the Nigerian Gas Flare Commercialisation Programme.


This remains paramount with associated gas focused deliverables that include deepening domestic gas penetration and adoption, amongst others. In order to make good on this promise, the Nigerian National Petroleum Corporation (NNPC) had restated its commitment to working with relevant partners and stakeholders in the oil and gas sector to boost delivery of gas to the domestic market.


The Group Managing Director of NNPC, Mallam Mele Kyari, made the commitment penultimate Monday at the launch of the Nigerian Gas Transportation Network Code (NGTNC), which is designed to enhance the use of gas as a catalyst for national economic development.


Surging gas reserve Nigeria is set to enhance its reputation as a major gasproducing nation, following the recent increase in natural reserves from 201 trillion standard cubic feet, SCF to 203.16 trillion SCF, representing a marginal increase of 0.57 per cent in one year.


On his part, Auwalu, who confirmed the development in an online engagement with journalists in Lagos on June 2, 2020, said: “Nigeria’s gas reserves have grown over the years. “The nation’s proven gas reserves stood at 201 trillion SCF in January 2019, but in January 2020, we succeeded in increasing it to 203.16 trillion SCF. “However, the nation’s oil reserves, which stood at 37 billion barrels in January in 2019, dropped to 36.89 billion barrels, indicating a drop off during the period, mainly because of limited investment in exploration, due mainly as a result of low liqoil prices.”


Problems ahead for oil It was widely reported that the U.S. headline crude, WTI, in a historic turn of event, crashed below $0 on Monday, April 20, 2020, for the first time ever, sending shock waves across the world. Despite the crude oil price crash and the volatility of the oil market, the prices of Nigeria’s flagship crude oil products have remained quite stable.


However, this still does not relieve Nigeria of its revenue pressure and foreign exchange earnings, as these prices fall far below the revised budget benchmark of $30 per barrel. In the preparation of its annual budget, Nigeria usually benchmarks its budget against the Brent crude, which fell to $21.37 per barrel, well below the $30 per barrel revised price.


The country still has a lot of unsold cargoes, as demand remains very low. The dangerous exposure of Nigeria to the crude oil price crash and low demand globally can be a huge blow to the country’s ability to meet its revenue target for the revised budget, lead to more pressure and instability in the country’s foreign exchange market, have a negative effect to different upstream projects in the country.


Gas to the rescue Kyari said at the launch of the NGTNC that the scheme was designed to enhance the use of gas as a catalyst for national economic development. In a goodwill message at the event, the NNPC GMD said the Corporation was at the centre of gas delivery to the domestic market, stressing that it was involved in all the available gas delivery infrastructure in the


country either directly or indirectly through joint venture partnership. He said the inauguration of the network code was an opportunity to enhance gas delivery and utilisation in furtherance of the Federal Government’s objective of transforming gas into a key component of the nation’s energy mix and revenue sources.


“We will continue to give our support to this process to ensure that the full delivery of this process is achieved. We commit to working closely with the DPR to ensure that the target of the government is attained. “This opportunity has provided the right framework for the transportation of gas from the source to the end user in order to get value.


“We are happy to have this framework on ground and we are ready to collaborate with all our partners, the gas off-takers, gas producers, transportation companies, shippers, and all those involved in the gas value chain,” Kyari enthused. ABC of NGTNC Speaking on the significance of NGTNC, Sylva said it would help to grow gas infrastructure, expand gas utilisation, curb gas flaring, and provide codes to standardize the gas value chain in line with global best practices.


The minister said the NGTNC was part of the key reforms instituted by the President Muhammadu Buhari’s administration to expand domestic gas-to-power, gas-to-industry, gas-to-manufacturing and mitigate the challenge associated with gas flaring in the country. He noted that the gas codes would go a long way in deepening economic development, improve gas supply, boost liqoil  uefied petroleum gas supply and attract more investment opportunities in the nation’s gas value chain.


Sylva commended NNPC and its gas subsidiary, the Nigerian Gas Company (NGC), for partnering with the Department of Petroleum Resources (DPR) to meet the six-month target to bring the network code to life. Earlier in his welcome remarks, Auwalu noted that the department has emplaced the network code platform and would continue to work with all Industry players for the success of the NGTNC.


The highpoint of the ceremony was the unveiling of the Network Code Electronic Licensing and Administrative System (NCELAS) portal and the supervision of the signing of framework agreements between NGC, Gas Hub, and Dangote Fertilizer Limited by the Minister of State for Petroleum Resources.


The Nigerian Gas Company will serve as the transporter while Gas Hub and Dangote Fertilizer Limited will serve as the shippers, with the Gas Aggregation Company of Nigeria Limited (GACN) in the role of agent as provided by the framework.


Gas as Nigeria’s safe haven


The gas economy is potentially Nigeria’s biggest cash cow with an estimated N1 billion income annually, Executive Chairman, Revenue Mobilisation Allocation and Fiscal Commission, (RMAFC), Elias Mbam, predicted.


To bring it to fruition, he called for more development of the gas infrastructure with a view to harnessing more revenue from the sector to the federation account. A statement by the agency is-sued by Nwachukwu Christian quoted him as saying potential of gas to revenue generation is enormous and needs to be properly exploited.


According to Mbam, the continuous flaring of gas in the country is not in the best interest of the nation.


According to his view, Nigeria is blessed with an abundance of gas deposits measuring over two trillion cubic tons, thereby making it to be the 9th largest country in gas reserves in the world, but the RMAFC chairman observed that Nigeria had not been able to utilise this.


He noted that against the health hazard posed to the oil producing communities in Nigeria due to environmental pollution, flared gas in Nigeria could be converted and channeled to the economy where over two million people could be employed while being utilized for industrial purposes such as power generation.


Mbam believes that in line with the current dwindling revenue from oil, gas economy could be a safe haven for the country while projecting that Nigeria could generate more than one billion dollars annually from the sector if only relevant stakeholders could do the needful as stated.


Last line


Gas has proven to be a potent source of revenue in place of oil for Nigeria. While collaboration is important among all stakeholders for the project, all Nigerians should rally round NNPC in the on-going effort to develop the gas sector for the benefit of the nation.

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