•We still have a long way to go to benefit maximally from our gas reserves
PICTURE of a country said to be blessed with 192 trillion cubic feet (tcf) reserves – the ninth in conventional gas reserves worldwide – yet ranks at the bottom 22nd position in terms of gas production, and even lower in consumption terms. A country that produces 7.5Bcf per day but manages a paltry 13 per cent, representing 1.01 billion cubic feet (Bcf) in local consumption; that aside the 34 per cent reused for gas injection and 43 per cent exported via liquefied natural gas (LNG) and West African Gas Pipeline.
Consider also that the country currently flares 10 per cent of its associated gas. Then imagine that this quantum is actually more than the entire flares by Saudi Arabia, Libya, Iran and Russia together – countries which, individually, produce more crude than Nigeria. Add to this the fact that the quantum of flared gas would actually suffice to generate between two and three gigawatts (3,000MW) of electricity.
Finally, picture also that about 73 per cent of the nation’s gas reserves are under Joint Venture (JV) contracts, controlled by International Oil Companies (IOCs), 12 per cent under Production Sharing Contracts (PSCs) and 15 per cent under sole risk contracts by indigenous companies, including two per cent by marginal field operators – a situation which makes the IoCs the chief culprits.
That is the picture of the nation’s gas sector as rendered by the Nigerian Gas Association (NGA) President, Dada Thomas, in Lagos.
Although somewhat startling, none of the revelations can be said to be new. This newspaper had written, countless times, not only of the urgent need to end the flaring of associated gas – a practice that has earned the country global notoriety, more so among oil producing nations – but also the need for a comprehensive programme on which the domestic gas utilisation plan can be anchored. The latest finding, if it is any indication, is of how arduous the journey ahead still is.
A flare-out, if we may restate, perhaps for the umpteenth time, is not an impossible feat. At least, that is what the example of the Netherlands (0%) shows; and to a lesser degree, the United States (0.6%) and Egypt ().9%). That Nigeria which produces a fraction of the output of those countries solely accounts for 76 percent of the entire flare makes it even more unacceptable.
Secondly, flare-out will not happen without a definite programme with specified timelines. Here, we are not talking of penalties for flaring which, although punitive in appearance, are easily absorbed by the oil companies as part of costs. With global temperatures on the rise – no thanks to global warming, it must be seen as something of an emergency now if only to halt the tide.
Thirdly, we must also aver that the practice will not stop without massive investment in domestic gas utilisation. Yes, we do admit that a lot of progress has been made to deepen the utilisation of gas across-the-board. The truth however is that the situation will remain largely the same without massive investment in domestic gas processing/distribution infrastructure to deliver gas to the end user.
The solution remains as simple as finding which policy matrix best works to attract investments into the sector, and this on a long term, sustainable basis. This is where the government needs to provide the leadership and direction, to bring the issue to a definite closure.
As for the NGA chieftain’s fears about the situation in which more than 70 per cent of the entire gas is consumed by power plants within an illiquid and poorly regulated gas-to-power value chain, portending great dangers not just to the power sector value chain but also the banking sector”, the solution seems to us simple enough: more investments to grow the domestic gas utilisation base.