They are giants in every sense. Even in gas flaring, Chevron, ExxonMobil and Shell are lords. The latest bulletin of the Nigerian National Petroleum Corporation (NNPC) shows that between January and June, they took the lead in spewing gas that would otherwise have yielded N99 billion for the country, if they had been compressed or liquefied.
In the first six months of the year, 222.8 million standard cubic feet (mscf) of gas were flared. Of this, Shell, Chevron and ExxonMobil contributed 67 per cent.
The oil giants are not entirely to be blamed for gas flaring. Reason: infrastructures to pipe the gas to where it can be turned to Compressed Natural Gas (CNG) or Liquefied Natural Gas (LNG) are not sufficient. This is why the decision of the U.S. Trade and Development Agency (USTDA) to help shore up the gas infrastructure is seen as a plus for the oil and gas industry and the country.
The agency said the goal of the grant was to support the development of compressed natural gas (CNG) infrastructure in Nigeria. The grant for this has been awarded recently to Oando Gas & Power Limited. The agency said: “The grant will fund a feasibility study to evaluate the viability of developing large-scale CNG refueling infrastructure in Lagos State, made possible because of Nigeria’s growing pipeline network. The new infrastructure would include the construction of numerous refueling stations across the state as well as vehicle maintenance and repair facilities. The study will also provide an analysis of policy and regulatory issues surrounding development.”
U.S. Consul General Jeffrey Hawkins said the completion of the project would help deepen the domestic gas market.
He said: “The completion of this project will play a critical role in the Government of Nigeria’s efforts to broaden and deepen the country’s domestic market for natural gas. This USTDA-funded initiative also holds the potential to generate significant U.S. exports of goods and services as well as build business relationships between U.S. industry and Nigeria’s leading gas company.”
The $494,000 grant was signed at the U.S. Consulate in Lagos by Hawkins on behalf of USTDA and by Chief Executive Officer Mobolaji Osunsanya on behalf of Oando Gas & Power, which owns and operates the country’s largest natural gas distribution network, with approximately 62 miles of pipeline already present in Lagos State and another 80 miles in progress.
USTDA, in a statement, said: “The company has identified the opportunity to develop the large-scale CNG infrastructure in order to provide cleaner and cheaper fuel to private and commercial vehicles throughout the region.
“The U.S. Trade and Development Agency helps companies create U.S. jobs through the export of U.S. goods and services for priority development projects in emerging economies. USTDA links U.S. businesses to export opportunities by funding project planning activities, pilot projects, and reverse trade missions while creating sustainable infrastructure and economic growth in partner countries.”
The journey to the partnership started late last year when OG&P announced that it had entered into agreement with the USTDA to jointly fund a feasibility study towards the development of an interstate natural gas transportation pipeline from the Excravos-Lagos Pipeline System to other Southwest States.
According to the company, the “study will evaluate technical and economic considerations for the development of a natural gas pipeline originating in Sagamu in Ogun State and passing through Ibadan (Oyo State) and Ilorin (Kwara State) before terminating at Jebba, Kwara State. The pipeline will also have extensions to the adjacent states of Osun and Ekiti. The supply of natural gas to the Southwest States will provide an opportunity for industries in the region to access a cheaper, reliable and cleaner fuel that will boost power generation and economic growth through increased industrialization. This development is in line with the current drive by the Nigerian National Petroleum Corporation (NNPC) to boost domestic gas supply under the Nigerian Gas Master Plan.”
Osunsanya added that: “The USTDA assistance provides the much desired boost to our aspiration to develop the Nigerian Gas Grid and in so doing, support the Federal Government in achieving its gas revolution agenda. Oando Gas and Power continues to seek opportunities to expand its gas infrastructure to reach more industries through pipeline distribution grid and Compressed Natural Gas (CNG) stations.”
USTDA chose Oando Gas and Power Limited because it pioneered the private sector piping and distribution of natural gas to industrial and commercial consumers.
The company said: “With 100km of pipes already laid in Lagos State and another 128 km in progress in Akwa Ibom and Cross River States, we are taking bold steps towards building sub-Saharan Africa’s largest gas pipeline network.
“Over the years, we made significant investments in the development of gas and power infrastructure that assure reliable supply of natural gas including high pressure transmission pipelines, gas processing facilities etc. Our aspiration is to replicate the success recorded in our Greater Lagos Natural Gas Distribution in other parts of Nigeria and West Africa whilst we strive to expand our horizon in Independent Power Generation to captive opportunities in locations where we have gas infrastructure and Exploration & Production assets.
“At Oando Gas and Power, the nature of our business pre-disposes us naturally as supporters of industrial and commercial concerns by offering them cheap and affordable energy solutions which translates into significant cost advantages to the organizations that we serve. We will continue to consistently demonstrate competitive leadership in the Nigerian energy market.”
Ending flaring by December 31
The Petroleum Industry Bill (PIB), which is before the National Assembly, wants oil companies to end gas flaring by December 31, a development considered a tall order given the high level of flaring still going on.
A draft of the PIB said: “Any licensee who flares or vents gas without the permission of the minister in (special) circumstances … shall be liable to pay a fine which shall not be less than the value of gas.”
Gas flaring has been illegal in the country since 1984, but deadlines always passed with the hazardous activity still going on, with oil companies and the Federal Government blaming each other for a lack of infrastructure needed to trap and pipe flared gas.
The USTDA initiative is considered by industry watchers as capable of helping curb flaring. Observers also believe that other initiatives such as the LNG projects must be fast-tracked.
Other efforts at curbing flaring
Former Heads of State Gen. Yakubu Gowon and Chief Ernest Shonekan are championing the call for curbing flaring through LNG projects.
Gen. Gowon, on a recent visit to the NLNG Plant in Bonny Island, said: “In just 13 years, Nigeria LNG Limited has brought in over $51 billion in revenue, delivered $9 billion dividends to Nigeria and paid $10 billion to the Joint Venture companies.
“It is therefore very disheartening if one stops for a moment and thinks about how different this country would have been if we had the benefit of an LNG plant since the 1960s. While such income would have been channeled towards roads construction, provision of basic amenities such as education and health, the business would have created jobs for young Nigerians, who are currently roaming the streets in search of job.
“Think of how much cash, sorry gas, we burnt between when we found oil in 1957 and when Nigeria LNG was able to start monetising our gas resources in 1999. Last year, this country flared over 460 billion standard cubic feet of gas that, if processed and exported, would have fetched the country over $2 billion and minimised the health and environmental impact of gas flares.
“Think of how oil palm industry left Nigeria for Malaysia. Think of how athletics – we won gold at the Sydney Olympics 12 years ago – left Nigeria for Jamaica. And the worst of all, countries we started out with in the LNG business have all left us behind.”
The former Head of State frowned at the rate at which Nigeria is fast losing its leadership in LNG market, urging the Federal Government to intervene urgently.
He added: “According to experts, all the LNG projects on the drawing board in Nigeria (NLNG Train 7, Brass LNG, OKLNG) will add about 30million tonnes of LNG to our national output, which is not that much when we compare with Australia which has only 60 per cent of our reserves but effectively generates much higher domestic electricity and will soon be exporting much more LNG than the all the LNG companies in Nigeria combined.
“We can’t afford to sit on the fence any longer. The time to build Train Seven is now! Nigeria LNG Limited has become too much of a good example to be allowed to fail; too much of a national beacon to be allowed to stumble; too much of a winning model to switch midstream. I have in private discussions with the management of Nigeria LNG Limited been assured that Train Seven will provide no fewer than 10,000 construction jobs; will attract over $8 billion in Direct Foreign Investment with its strong balance sheet; and will increase monetisation of gas resources, otherwise still being flared.”
Shonekan recently urged President Goodluck Jonathan to approve the Train 7 of the NLNG Plant and other LNG projects.
The elder statesman said: “The LNG market is tightening and other nations are not staying idle. For instance, the United States, formerly a major LNG export destination, will become a net LNG exporter by 2016, starting at 1.1 billion cubic feet per day and rising to 2.2 bcf/d in 2019. On the other hand, Nigeria LNG’s 6-train facility has a capacity for 22mtpa on LNG and up to 5mtpa of Natural Gas Liquids (NGL).”
NLNG Managing Director Babs Omotowa said delay in the progress of LNG projects may dip Nigeria’s market share in the global liquefied natural gas supply by a marginal 5 percent in 2017.
Omotowa, while speaking at the 2012 edition of the Nigeria Oil and Gas (NOG-12) conference in Abuja, said output has stagnated at 22 million metric tonnes per annum.
He said: “Looking at the market share dip to 10 percent in 2008; which is now 8 percent and will be 5 percent by 2017. Accelerated progress on Train 7 and other LNG projects will help build a better Nigeria.”
