A Review of the Nigerian Energy Industry

Nigeria introduces gas transportation network code

16 August, 2011, Sweetcrude, Abuja – Nigeria has established a National Gas Transportation Network Code that will guide access to gas transmission network.

The completion of the first phase of the Gas Network Code, according to analysts, is a significant milestone in the development of Nigeria’s gas for the domestic and international markets as it is expected to substantially boost the reputation of the nation’s gas market, attracting increased foreign and local investments to the sector.

The code was completed and delivered to the Nigerian National Petroleum Corporation (NNPC) by Osprey Investments Group Limited, a British consultancy company and its technical partner, TPA Solutions.
The establishment of the national gas transportation network code was informed by Federal Government’s desire to regulate and control the operation of gas pipelines. Government had reasoned that successful transportation of gas for power generation and other domestic use required a set of rules setting forth the quantity and quality of gas, which international oil companies would input into the pipeline as well the quantity and quality of gas to be utilised by users, including power plants.

According to Osprey, the “Code is intended to be a contractual framework between transporter (or network operator) and network users (known as shippers) that provides open competitive access to existing and future gas transportation infrastructure.
In a presentation to the NNPC in Abuja last week, Director of TPA Solutions, Mr. Mark Sutton said the “code will initially cover only the Escravos-Lagos Pipeline System (ELPS) network but should be capable of incorporating other transportation infrastructure, not necessarily all owned by NNPC, in due course”.

“The Gas Transportation Network Code is absolutely essential to the successful operation of Nigeria’s domestic gas transportation pipeline network. NNPC, and its gas transportation arm, the Nigerian Gas Company (NGC), is further developing the Gas Transportation Network Code, with its consultants, Osprey Investments and the various gas industry stakeholders in Nigeria, including suppliers, shippers, buyers and other interested parties”, he said.

Osprey Investments Group Limited, a British consultancy company based in Abuja, and its predecessor companies had been involved in project management, monitoring and evaluation of major oil and gas projects in Nigeria. TPA Solutions was responsible for developing the Gas Network Code for the United Kingdom.
The Roadmap for Power Sector Reform provides that achieving the target of 40,000 megawatts of power by 2020 will require investments (in fuel to power, generation, transmission, and distribution) of $10 billion for each of the next 10 years.
Analysts said the completion of the Gas Network Code was a significant milestone in the development of Nigeria’s gas for the domestic and international markets.

They opined that the establishment of the Gas Network Code could substantially improve the image of Nigeria’s gas market, thereby leading to an increase in foreign investment in the Nigerian gas market.
Petroleum Minister, Mrs. Diezani Alison-Madueke, had in May hinted that the Federal Government had concluded arrangements to introduce gas network code to guide access to gas transmission networks.

The minister who spoke at the signing ceremony of gas supply agreement between the Power Holding Company of Nigeria (PHCN) on one hand, and NNPC, Total, Chevron, Agip, and Shell Petroleum on the other, said the first set of stakeholders made up of 25 persons drawn from the international oil companies and PHCN would undergo a week training in London on the operations of the Network Code.

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