-By Fred Ojiegbe
Nigeria’s Minister of State for Petroleum Resources Chief Timipre Sylva early in the year declared 2020 as the year of gas for the country making it clear that gas development was as part of the government priority to fast track industrialization.
The minister’s declaration is not unconnected with the enormous potential natural gas has to diversify and grow the Nigerian economy, power industries and homes, create jobs, develop associated industries in the petrochemical sector and raise people out of poverty.
According to data sourced from the Nigerian National Petroleum Corporation (NNPC), Nigeria has the largest natural gas reserves in Africa and 9th largest gas reserves in the world with an estimated proven and probable gas reserves of 202 trillion cubic feet (tcf) and an upside potential of about of 600tcf. With the undiscovered potential, Nigeria could be in the same league as Iran, Qatar, Saudi Arabia and Russia. In fact, oil experts say there is more gas in Nigeria than oil.
In terms of gas production and utilization, Nigeria averages about 8.4 billion standard cubic feet per day (scf/d). While only 18% of the production is consumed in the domestic market (Power, Industries and West African Gas Pipeline- WAGP), 43% is exported as LNG, 32% is re-injected for enhanced oil recovery and other operational uses like fuel gas while 7% of total gas production is currently being flared.
However, the country’s gas production and utilization figures show that most of the gas produced are exported while little is available for power generation and for industries in-country.
Valuechain, in this report lists key critical gas projects in the sector that will define the landscape for gas in 2020.
The ability of the government and including local and international oil companies, service companies as well as other critical stakeholders in the country to move faster with these projects will determine whether the aspirations of gas for 2020 will be achieved.
Recognizing the potential of the enormous natural gas resources and the unprecedented growth in domestic gas demand, the Federal Government through the Ministry of Petroleum Resources has championed various interventions to stimulate gas utilization and monetization.
The NGFCP
One of the recent initiatives is the Nigeria Gas Flare Commercialization Program (NGFCP), approved by the Federal Executive Council in June 2016, as strategy designed to eliminate gas flares.
The federal government had in November, 2018 called for Expression of Interest (EoI) in the NGFCP. The 205 out of 850 companies that emerged successful are waiting to be invited to submit their proposal for flare gas utilization through the Request for Proposals (RfP) phase of the NGFCP.
About US$ 3.5 billion worth of investments are required to achieve the gas flare commercialization target by 2020.
Once operational, projects launched under the NCFCP would reduce Nigeria’s emissions by about 13million tons of CO2 per year, consistent with Nigeria’s commitment to the reduction of Greenhouse Gases under the Paris Climate Change Agreement.
AKK Pipeline Project
Setting the stage for the actualisation of the Final Investment Decisions (FIDs) for the Abuja-Kaduna- Kano pipeline project is one key priority the federal government and the industry should set for themselves this year.
So far, NNPC, China Petroleum Pipeline Engineering Company Ltd (CPPECL) and Brantex Consortium, have concluded plans to commence work on the AKK project.
The pipeline estimated to cost $2.8bn is a 614km-long natural gas pipeline slated to originate from Ajaokuta through Abuja and Kaduna, before ending at a terminal gas station in Kano.
The engineering, procurement and construction (EPC) contract for phase one was awarded to OilServe / Oando consortium in April 2018. The Brentex / China Petroleum Pipeline Bureau (CPP) consortium was awarded the EPC contract for phase three.
The AKK gas pipeline is expected to boost the nation’s revenue base and generate employment opportunities for the youth.
The Nigeria LNG Train 7
Another gas that will determine whether 2020 will be a year of gas is the Nigeria LNG Limited (NLNG) Train 7 expansion project.
The NLNG in Abuja late December 2019 took the Final Investment Decision (FID) for the Train 7 Project, which will signal the commencement of construction of the 7th Train at the Bonny complex of the company.
This decision allows the expansion of the capacity of NLNG’s six-train plant from the 22 Million Tonnes Per Annum (MTPA) to 30 MTPA, with the award of contracts for the engineering, procurement and construction activities to follow the closure of bank and Export Credit Agency (ECA) financing, and the finalization of some key supporting commercial agreements expected in early 2020.
NLNG is an incorporated Joint-Venture owned by four Shareholders, namely, the Federal Government of Nigeria, represented by NNPC (49%), Shell (25.6%), Total (15%), and Eni International (10.4%).
The Train 7 project is coming 12 years after the completion of Train 6, and is also coming 20 years after the first train came on stream.
Train 7 project construction period would last approximately five years with first Liquefied Natural Gas (LNG) expected in 2024.
The Project upon completion will support the Federal Government’s drive to diversify its revenue portfolio and generate more revenue from Nigeria’s proven gas reserves of about 200 Trillion Cubic Feet (tcf).
Brass LNG
Originally set up in 2003, the Brass LNG is a multi-billion dollar liquefied natural gas project located in Brass, Bayelsa State with NNPC as its major shareholder (59.08%), Total (20.46%) and ENI (20.46%). The gas project has been stuck in the early work stages for more than a decade due to a number of challenges.
The shareholders have kept the project long for years but this year the ministry as well as the NNPC are expected to show enormous enthusiasm towards realising the early delivery and realisation of the project.
Assa North-Ohaji South (ANOH) Gas Project
The Assa North-Ohaji South, is one of the gas projects projected to boost gas production and infrastructure development in Nigeria. ANOH Gas Processing Company, which is owned by Seplat and the Nigerian Gas Company, a unit of the NNPC, will develop, build and operate the plant in Imo State.
The plant, which will process wet gas from the unitized upstream fields at OML 53 and OML 21, has an initial capacity of 300 million standard cubic feet per day. It’s scheduled to begin production by the last quarter of 2020 and the first supply is targeted in 2021.
Kolmani River-2 Gas find
At the Kolmani River II Well on the Upper Benue Trough, Gongola Basin, in the North-Eastern part of the country where NNPC recently announced the discovery of hydrocarbon (oil and gas) deposits, a Drill Stem Test (DST) is currently on-going to confirm the commercial viability and flow of the Kolmani River reservoirs.
So far, it has been confirmed that at the Kolmani River-2 Well desktop estimates revealed that about 400bcf of gas is expected to be encountered.
Preliminary reports indicate that the discovery consists of gas, condensate and light sweet oil. Computation of hydrocarbon volume is on-going and will be announced in due course.
It is expected that NNPC will drill additional wells for full evaluation of the hydrocarbon volume in the Gongola Basin.
1,350mw Abuja Power Plant
As part of efforts to increase energy supply level, NNPC is investing in the Abuja 1,350mw Independent Power Plant (IPP), a project that will make case for more domestic gas supply to the power sector.
The project would leverage on the existing huge natural gas resources from the NNPC upstream and the proposed AKK gas pipeline.
The project would sit on a 54.7 hectares of land in Dukpa, a suburb in Gwagwalada Area Council of the FCT.
Late last year, NNPC and the United States Trade and Development Agency (USTDA) agreed to sign a $1.16 million grant agreement as part funding for the NNPC-Abuja IPP modelled to generate 1,350 megawatts of electricity for the country.
The plan by the corporation to build the 1,350mw power plant in Abuja was part of the national strategy to monetize the abundant natural gas resources in the country. Following the signing of the deal, the NNPC has begun Environmental Impact Assessment (EIA) on the proposed plant to be located in Abuja, the capital city of the country.
Nigeria Morocco Gas Pipeline
In June 2018, Nigeria and Morocco finalized the signing of the first phase of a pipeline project.
The 5,660 kilometers pipeline project is to supply 15 countries in West Africa. The line will run from Nigeria transversing several West African countries to Morocco.
Several meetings to assess the progress of the Gas Pipeline project have been held as part of the Moroccan-Nigerian determination to deliver the project in “record time.” So far not much has been made public about the project amid concerns over political hurdles that may cause a delay in delivery.
$9.7bn Bonga South-West/Aparo
Shell’s $9.7bn Bonga South-West/Aparo, is among a number of oil and gas projects facing an uncertain future as international oil companies operating in the country have failed to sanction the project several years after it was announced.
The Bonga Southwest Aparo field is located 12 km southwest of the Bonga Main field in the southern part of the Niger Delta, offshore Nigeria.
The project is expected to produce 225,000 barrels per day (b/d) and 270 million standard cubic feet per day (mmscfd) of gas at peak production by 2022 after first oil in 2021. More than 44 wells are planned as well as a 98-kilometre 16inch gas export pipeline.
The Bonga project would be the first major deep offshore development after Egina.
A Final Investment Decision (FID), is expected on the Bonga deep-water project after Shell and the NNPC invited bidders for the project’s execution in February 2019.
Announced gas projects that have not been sanctioned include Shell’s $1.5bn Gbaran Phase 3, Eni’s $1.1bn Samabri-Biseni and Shell’s $1.2bn Uzu.
According to the US Energy Information Administration, the statistical arm of the US Energy Department, several planned deepwater projects in Nigeria that could have helped expand its production capacity have been repeatedly pushed back because of regulatory uncertainty caused by the delay in passing the Petroleum Industry Bill.
