30 July 2013, Lagos – The Federal Government has given the assurance that the end is near for the nation’s current power crises, as more gas will be released to feed the power generating plants in the country.
The assurance was given last week by the Minister for Petroleum Resources, Mrs. Diezani Alison-Madueke, in her presentation titled: “Moving the oil and gas sector to the next level,” delivered at the 2013 Ministerial Platform in Abuja.
For decades, Nigeria had been plunged into a seemingly endless energy crisis on account of a plethora of reasons including gas supply shortages.
However, the minister disclosed that this challenge is gradually being overcome by some giant strides recorded since the President Goodluck Jonathan put in place strident measures to address the issue.
To start with, she disclosed that gas flaring has reduced significantly from about 25 percent of production in 2010, to about 12 percent currently. She explained that this is because every new oil project has a gas flare reduction programme.
Secondly, she said that the volume of gas available for domestic use has also increased, noting that before now, volume available was less than 10 percent of total gas produced.
She added that quantity available for domestic consumption has increased to about 1.6 billion standard cubic feet, SCF. This, she said is attributable to the fact that gas pricing is almost at par with international market price put at $1.50/1000 British Thermal Unit, BTU.
She disclosed that while the power sector is paying $1/1,000BTU, the non-power is paying $2/1000BTU, adding that by next year, the average domestic price of gas will be over $2/1000 BTU.
Indeed, the minister noted that the issue with the Nigeria’s power sector is not really gas supply shortages, but transmission and distribution issues occasioned by systems collapse.
For example, she recalled that an Emergency Gas Supply Plan introduced by government in April 2012, yielded significant results, as power generation peaked at 4.2 Gigga watts by August 2012, before it started dropping again.
She further disclosed that the power and industrial sectors were the highest consumer of gas locally during the year, adding that about 1.2 billion SCF/d of the 1.7 billion SCF/d of gas supplied locally was consumed by the power sector.
Alison-Madueke maintained that the development resulted in federal government’s decision to transform the gas sector, and put it in a better position to contribute meaningfully to the development of the Nigerian economy.
She said, “Recognising the potential for tremendous economic growth inherent in the nation’s vast natural gas resources, President Goodluck Jonathan outlined a three-point mandate for natural gas comprising boost in gas supply to the power sector.
“Stimulation of gas based industrialisation around Fertiliser, Petrochemicals, Methanol etc., effectively leveraging gas as feedstock for key industries, thus creating jobs and selective investment in high value regional pipeline and LNG export opportunities to boost revenues from gas sales.
The minister further said that the federal government developed a strategic objective to link gas to the development of the Nigerian economy, such as ensuring that gas is delivered for at least a threefold increase in Nigeria’s power generation capacity by 2015.
“We also aim to create regional hub for gas-based industries – fertilizer, petrochemical and methanol; transform gas sector to value adding sector and consolidate Nigeria’s position and market share in high value export markets,” she said.
New gas supplies
Expatiating further, the Group executive Director, Gas and Power, Nigerian National Petroleum Corporation, NNPC, Dr. David Ige, in a telephone conversation with Vanguard, disclosed that additional daily 290 million SCF is expected to come on stream between now and 2016.
According to him, 100mmscf/d will come from the Nigerian Petroleum Development Company, NPDC, a subsidiary of the NNPC, which will come before November end, while the remaining 190mmscf/d will come in over the next three years between 2014 and 2016, from the Southern swamp, Forcardos Yokri, Ogidi and Oben.
He said: “2016 will be a critical year for Nigeria because we will have more than enough gas to meet all our power needs. Besides, the Oben-Oben Gas pipeline would have been completed by then, and even the stranded gas of about 200mmscf/d – 100mmscf/d from ExxonMobil and another 100mmscf/d from Total will now be evacuated.”
He noted that the 1.6billion SCF/d now being supplied to the domestic market is as a result of intensified gas gathering activities by oil companies. The listed the supply as coming from Chevron’s Escravos 420mmscf; Shell’s Utorogu 320mmscf; Shell’s Ughelli 70mmscf; Sapele 60mmscf; and Pan Ocean’s 100mmscf.
He added that not all of these quantities can be fired due to transmission challenges and pipeline vandalism.
Crude oil production
Alison-Madueke put Nigeria’s current crude output at 2.15 million barrels per day, dropping from about 2.6 million bpd as at January 2013. She blamed the decline on the rising cases of pipeline vandalism and crude theft.
Despite this, she noted that the Nigerian National Petroleum Corporation’s, NNPC, revenue from downstream retail activities appreciated by 39 per cent over the last three years to N151 billion from N219 billion.
According to her, Number of NNPC’s retail outlets increased from 418 to 505 thereby, increasing NNPC’s domestic market share from 12 per cent to 15 per cent.
She added that the NNPC is eyeing a more aggressive growth, targeting 42 per cent of the domestic market share in the coming years.
Listing the achievements of the present administration in the petroleum sector between 2010 and 2013, she said, “in the upstream sector, we have been able to ensure increased exploration activities, sustained crude oil production and increased upstream domestic gas supply.
“In the midstream and downstream, we ensured gas commercialisation and gas infrastructure upgrade; repair and upgrade of midstream oil facilities; ensured stable supply of petroleum products; effective and efficient administration of subsidies and increased domestic refining.”
The Petroleum Minister further stated that the government is stepping up plans to grow the Nigerian Petroleum Development Company’s, NPDC, production capacity to about 250,000 barrels per day of hydrocarbon by 2015 and reserves of 1,517 million barrel of oil equivalent by 2016.
She disclosed that the largest contributor to NPDC’s production growth will be the taking over of OMLs 26, 30, 34, 40 and 42, adding that the NPDC was assigned all of NNPC’s equity in the divested oil blocks of Shell Petroleum Development Company Joint Venture.
– Clara Nwachukwu and Michael Eboh, Vanguard