Why Nigerian gas sector has not developed

Gas pipeline12 August 2014, Lagos – Why has Nigeria, with 179 trillion cubic feet of proven gas reserves not developed its gas sector since feedstock industries such as fertiliser could drive the economy?

That was the concern raised by the Managing Director of Total Exploration and Production Nigeria Limited, Mrs. Elisabeth Proust, at the just concluded Society of Petroleum Engineering, SPE Conference and Exhibition held in Lagos.

According to Proust, Nigeria has inadequate infrastructure across the value chain, such as production and processing facilities, pipelines, power generation, transmission, and distribution.She also explained that while current prices rarely support the cost of infrastructure, uncompetitive pricing and fiscals hinder the much needed investment to pursue power agenda.

“Lack of adequate joint venture funding is limiting growth in gas development and production. Resolving JV funding could increase production by 2.8 billion cubic feet per day by 2020.

“Threat to security of lives and property, regulations, risks of contracts being breached – solving these will enable Nigeria to realise its gas potential,” she said.

She further said that Nigeria’s domestic gas market has significant potential that requires investment across the value chain to realise growth and achieve economies of scale as the gas resource potential is sufficient to meet the growing domestic demand and of high-value export market.

“Looking forward, to position itself favourably relative to competition for investment, Nigeria needs to create a more stable regulatory, competitive fiscals and conducive business environment.“ She should allow domestic price fiscals that support private sector infrastructure and NAG development such as willing buyer, willing seller approach.

“There should be delivery of backbone gas and power transmission infrastructure such as interconnected pipelines, completion of ELPS loop with compression, OB3 line and Eastern electricity transmission lines,” she added.

According to the Total boss, while gas trade has grown more intricate in just 10 years, with multiple import markets and competing suppliers, there is a strong growth in global gas demand, with more than half of additional demand coming from Asia and Middle East between now and 2030.Explaining the market growth rate in the last 10 years, she stated that in 2001, there were eight main export routes and three main markets (Europe, United States, and North Asia).

Whereas in 2011, there were 18 main export routes, five new import markets (Canada, Mexico, China, India and Brazil) and four new export countries (West Africa, Caspian, US and Peru).

“Growing global gas trade has linked regional gas markets and shifted the global energy supply balance. The implications for Nigeria include, increasing competition between suppliers on the global gas market; pressure to develop competitive gas sector in order to capitalise on gas resources; greater opportunity for economic development through a combination of domestic supply and exports,” she said.

About the Author