15 July 2014, Lagos – Going by the wave of divestments in the Nigerian oil and gas sector, half of the domestic gas market will be in the hands of Nigerians by 2018, Mr. Austin Avuru, Managing Director, Seplat Petroleum has said.
Avuru, stated that independents will be responsible for 1.5 billion cubic feet per day (Bcf/d), or half of the total supply of natural gas in the domestic market.
He also said that these companies will produce 500,000 barrels of oil per day, or about 20 percent of the Nigerian output by that same year.
“The ongoing divestments by Shell and other IOCs, including Chevron, are transferring significant asset holdings to Nigerians,” Avuru said at a session of the Lagos Oil Club.
He however explained that these figures can only be reached and sustained by the indigenous companies if they focus on strong corporate governance, which allows quality planning and delivery and policy consistency, leading to long term sustainability.
According to Avuru, local firms are yet to cultivate the habit of sustained improvement in production over time, unlike the IOCs operating in the country.
“There is no IOC which was doing 30,000 barrels of oil per day years ago that is not producing 50,000 barrels per day. But take a look at Nigerian companies who were producing 40,000 barrels per day just 10 years ago,” he added.
However, the Seplat boss expressed optimism that indigenous companies are making head way in the gas sub-sector.
“We are getting to a point where long term domestic energy security is becoming the forte of indigenous companies at the rate we are going. You all know that in the past 40 years, we have spoken about LPG (domestic consumption of LPG and its consumption in this country).
“No multinational has dared, even when in the last 40 years we have been flaring rich gas, no LPG has come out of the LNG plants, because the gas feeding the LNG plant has to be as dry as possible. It became a requirement to put up an LPG plant upstream of the LNG. And the LNG extracted out of the gas stream is meant for export. It is only when government forced them to put something in the domestic market that they came up with a very complex transportation scheme that made the whole thing almost impossible to transmit the LPG to the domestic market,” he said.
For Avuru, the indigenous outlook beyond 2017 portends increase in production of oil and gas in the country.
“When I talk about indigenous outlook beyond 2017, what do I see? I see production.
“With the wave of divestments, I see that by the end of 2017, indigenous operators, including NPDC and partners will account for at least 500,000 barrels of oil production, and in my view about 1.5 billion scf of gas per day (which will be about 50 percent of domestic gas demand).
“Gas demand in the last four years has climbed from under 500 million scf per day to over 1 billion scf per day. By the end of 2016, it will be approaching 2.5 billion scf to 3 billion scf per day.
As regards shortage of gas to power plants, he explained that there is a shortfall of 400 million scf supply of gas a day to the power sector.
“The demand as we speak today is 400 million scf higher than what we can supply. By the end of this year, when the last batch of the NIPPs would have been sold, the short fall will be 1 biilion scf.