Punch: Thoughts on the Nigerian Gas Master Plan

Nigeria has abundant reserves of associated and non-associated gas estimated in excess of 187 trillion standard cubic feet. Though the country is ranked seventh in terms of proven natural gas reserves in the world, geological experts hold the view that more gas can still be found. Potentially, up to 600Tscf. This is realisable if oil and gas companies deliberately explore for gas as against finding gas while in search for oil. To facilitate gas gathering, processing and utilisation will require favourable development oriented market conditions and policy framework for the gas sector. This will convert our potential in gas into actual available resources that will drive national development and resolve the contradiction of a gas-endowed and exporting nation that cannot find enough gas to fuel its electricity generating plants.

Despite being rich in oil and gas resources, Nigeria suffers from significant under-capacity in electricity generation, with frequent power outages driving consumers towards large scale use of expensive back-up generation. Commentators have stated that the Nigerian Gas Industry is characterised by opaqueness, oligopolistic tendencies, inadequate infrastructure and investments, regulatory capture and politicisation of policy implementation. Low investment in gas infrastructure over the years has continued to hamper the development of the huge natural gas reserves in the country for domestic consumption, particularly for power generation. The International Energy Agency, in its special report entitled, “Africa Energy Outlook 2014”, said a critical uncertainty for Nigeria’s gas supply outlook was its inability to stimulate significant production of non-associated gas. “Huge resources exist, sufficient to cover both domestic demand and exports. Production of non-associated gas increases in our projection period, but it is gradual. Exploiting this resource requires a change in focus by the upstream sector and, importantly, the government to establish a framework to incentivise the necessary large-scale capital investment”, the report notes. MORE