By Yange Ikyaa
According to the Vice President of Nigeria, Kashim Shettima, Nigeria is an ocean of gas and a drop of oil.
With over 200 trillion cubic feet of untapped gas resources, the country ranks 9th globally in terms of proven reserves.
However, “the story of Nigeria’s gas riches and potential cannot be complete without understanding that we are far off from that potential and have a lot of work to do as public sector leaders and as captains of industry,” said the Vice President while speaking during the 6th Valuechain Annual Lecture and Awards, which held on October 26 at the PTDF Conference Auditorium in Abuja.
The theme of the conference was “Midstream Gas Development: A Partway to Energy Transition,” as was adjudged by participants as holding great significance for the energy industry in Nigeria and beyond.
“Today, Nigeria earns around $5 billion from gas production, a figure that is 40% less than in Egypt, which has around 30% of Nigeria’s gas reserves. The country’s production to reserve ratio is less than a third of Egypt’s, less than a quarter of Algeria’s and around 10% of Malaysia’s,” he added.
The impact of truly exploiting the nation’s gas reserves cannot be overstated. Gas is critical to the nation’s power supply, not only accounting for 80% of power generation today, but expected to remain the dominant power generation source by the end of this decade. It is also a critical transition fuel for the country’s ambitious climate target of achieving net-zero emissions by 2060.
The number of industries that are gas-based and those that utilize gas for power are many, ranging from fertilizer and methanol to cement and consumer goods. Furthermore, a booming economy built on the exploitation of gas reserves can accelerate national development and also prepare Nigeria for a post-oil world.
Unfortunately, in the trail of the Russia-Ukraine war, where the EU and many other nations were shopping for liquefied natural gas (LNG), Nigeria’s largest LNG assets have been operating significantly below capacity because gas supply has been inadequate. At this rate, it has been estimated that the country could have a demand-supply gap of up to 10bscfd of gas by the year 2030.
The importance of critical gas transport infrastructure, processing facilities and other midstream infrastructure cannot be overstated, as one may only need to understand just by looking at the number of power plants and factories which have been built around the Escravos-Lagos-Pipeline System in the southern part of Nigeria alone.
Then, in the northern part of the country, Valuechain learn that the AKK pipeline is nearing completion, with efforts by NNPC and other key stakeholders to unlock gas demand along the northern corridor. But there is a lot of work left to be done. The Obigbo-Umuahia-Ajaokuta pipeline must also be made a key priority in order to ensure that the AKK pipeline is not gas-constrained, while opening up new demand along its right of way.
These projects and many others around the country can be significantly accelerated if the government focuses on making investments in them more attractive.
In addition, the country’s network code must adequately cover private pipelines, helping private investors in the process to recover their costs and make a return on their investments by creating a new framework for tariffs that is not too rigid but flexible.
Also, Nigeria needs to put in place clear guidelines for tolling and sharing of facilities among energy companies.
While the power sector remains the largest consumer of domestic gas in Nigeria, the government has often assured of working actively to resolve longstanding liquidity issues in the sector.
In the words of the Vice President, “some of the most ambitious customer metering initiatives are underway or soon to be announced. We will continue to strengthen sector governance that favours only technically and financially sound investors to own key assets.”
Further commenting on the government’s commitment to project financing, he maintained that “nobody will build our country and continent if we don’t. And in this journey, the administration of Asiwaju Bola Ahmed Tinubu will be your partner every step of the way.
“We will listen to your specific concerns and unblock the challenges that you face. Attracting investments is our priority and, on gas investments specifically, we do not have a lot of time to waste.”
Also speaking at the occasion, His Royal Highness, the Emir of Kano, Alh. (Dr.) Aminu Ado Bayero, CFR, who is also the Chairman, Editorial Advisory Council of Valuechain Energy Magazine, acknowledged the contributions and growing resilience of the media group for not only keeping faith with the energy sector but also consistently keeping pace with evolving dynamics through the years, as both a curator and agenda setter.
Part of the evolving dynamics before the nation, the Emir said, is the matter of energy transition, for which a carefully chosen theme was built around the many prospects of midstream gas development.
His words: “It is not out of place to rely on the many assurances that will be harvested as the outcome of robust deliberations from this gathering, given the caliber of eminent persons we see here today, whose footprints are instructive at policy levels in the sector and industry.
To get to the point of this assurance, however, I must acknowledge and commend the Federal Government for spearheading the viable transition through the promulgation of the Petroleum Industry Bill (Act).
“This instructive leap has reinforced the much-needed linkages between the upstream and downstream value chain and has enabled higher prospects for foreign and local investments in the sector.”
The Emir further “identified” with the likely benefits for growth of enterprises, particularly small businesses that may now be encouraged to thrive with enabling incentives for the prosperity of Nigerian people and our communities.
He said he was particularly delighted to convey the enthusiasm of the good people of Kano, about the Ajaokuta-Kaduna-Kano (AKK) Natural Gas Pipeline project, running through communities, states and cultures, while harnessing economic linkages along the corridor.
According to him, “it is equally noteworthy and commendable that, the Federal Government has, through the PIA, mustered the political will to liberalize the petroleum industry for fair participation and harmonious relations between the players, regulators and host communities under an emerging regime of energy transition.”
In addition, the Royal Father called on the government to intensify efforts to make sure that Nigeria reaped all the benefits it could from its abundant gas resources, even as the country is now focused on the 2060 net-zero target for carbon emission.
In his own remarks on the relevance of gas to the Nigerian economy, the Secretary General of the African Petroleum Producers Organization (APPO), Dr. Omar Farouk Ibrahim, said “it is as if we are on a train to energy transition and my appeal to Nigeria, to Africa, then to the governments of the world is that we should not allow ourselves to be constrained into abandoning the fuel that we have, the energy that we have for what we expect to get.
“The Western world used oil and gas for 150 years to get where they are today and, today, we all know that they no longer need oil and gas to sustain their economies because they have moved from there to relying on artificial intelligence and knowledge and renewables.
“Therefore, if you kill your oil, kill your gas, you will still be dependent on them at the end of the day. There is no way that we Africans can move from where we are today to an industrialized society without using energy because energy is central to any human endeavor.”
However, there are challenges ahead in trying to make the most of the gas resources that Nigeria is endowed with. One of such challenges is theft, which is actually a global issue that spans across the supply chain, including wellheads, flow stations, storage facilities, pipelines, tanker loading, and illegal STS during transportation, among others.
According to Adegbite Falade, the Chief Executive Officer (CEO) of Aradel Holdings Plc, Nigeria’s foremost integrated energy company, about 5-7% of the global crude oil and petroleum-fuel market is stolen annually, estimated at about $133 billion.
In Nigeria, he said, crude oil has been stolen from around the late 1970s to about N16.25 trillion has been lost to the menace in the past 12 years.
The consequences of this negative trend extend beyond economic losses into environmental degradation, health-related issues, low quality of life, and overall national underdevelopment.
While making a case for energy sufficiency and sustainability in Nigeria, the Publisher/Editor-in-Chief of Valuechain Media Group, Musa Bashir Usman, highlighted the critical importance of developing the midstream gas sector as an integral part of what he called “our energy transition journey,” adding that “to achieve our energy goals as a nation, we must consciously invest in infrastructure that facilitates the smooth transition of gas production from the upstream value chain to the downstream end.”
This noble task, he said, is not one that can be accomplished in isolation, but requires determination from the government, which should provide the necessary policies and funding to make such investments attractive to both local and international stakeholders.
