The Nation Newspaper

Tag: Gas supply

  • Nestoil wants bolder initiatives to boost gas supply

    The Group Managing Director of Nestoil Limited, Dr Ernest Obiejesi, says the Power sector holds the key to stimulating growth in the domestic market.

    He spoke at the 4th Nigeria Gas Conference which held in Abuja, recently.

    According to him, the gas supply industry in Nigeria will experience a boom if the liquidity issues in the power sector were fixed. He explained that the Power sector accounts for over 80 percent of the domestic gas off take market. Obiejesi explained that liquidity issues in the power sector means that gas producers are owed huge sums of money for gas they have supplied. He added that the situation is a huge disincentive for gas producers to invest heavily in any form of gas gathering infrastructure.

    The Nestoil boss commended the Federal Government for the recent Gas Flaring Regulation embedded in the 2017 Gas Policy, which he described as an audacious and innovative step by Government to discourage gas flaring, but  not far reaching enough.

    According to him, a permanent solution would be to address the liquidity issues in the downstream and power sectors to encourage much needed investments in gas gathering infrastructure that would eliminate gas flaring.

    “Everyone agrees that a willing-buyer-willing seller arrangement is what will ultimately unbundle the Gas industry in Nigeria and across the West Coast but Government must be ready to make the right seed-investments and take the tough decisions that will enable the gas supply market grow into maturity,” said Obiejesi.

    He further urged government to continue to encourage indigenous players in the Oil and Gas industry. “OML 42, which we acquired in 2011 was fraught with a lot of challenges at the time it was sold by the IOCs. We are proud to announce however that Gas production of 40MMScf per day is set to be introduced to the domestic gas supply network by the end of this week with another 40MMScf per day being targeted for end of November 2018 for a total of 80MMScf per day by the end of this year,” he said.

  • NNPC restores gas supply to power plants

    THE Transmission Company of Nigeria (TCN) yesterday in Lagos said gas supply to generating stations had built up gradually after the Nigeria National Petroleum Corporation (NNPC) restored a ruptured pipeline.

    TCN General Manager, Public Affairs Mrs. Ndidi Mbah said within a day, power supply would be restored to normal.

    Mrs. Mbah said an indication that gas supply had improved was the increase in power generation into the National Grid to 3,876.9 Megawatts as at 17.00hrs on Monday, as reported by National Control Centre (NCC).

    “TCN wishes to use this opportunity to commend NNPC, especially Nigerian Gas Corporation (NGC) for the quick intervention.

    “The company also appreciates the Ministry of Power, Generation Companies (GENCOs), Distribution Companies (DISCOs) and electricity customers for their cooperation during the crises period,” she said.

    According to Mrs. Mbah, as soon as the gas build up is completed, the affected generating stations would resume normal generation into the national grid.

    The general manager said through the implementation of Transmission Rehabilitation and Expansion Programme, TCN was building new substations as well as upgrading existing ones and transmission lines all over the country.

    “This is expected to further stabilise the grid and also put necessary flexibility and redundancy in line with N-1 capacity.

    “TCN will continue to count on all Nigerians for support and understanding as it continues to expand the nations’ grid,” she said in a statement.

    TCN, on June 15, said rupture of a major NGC pipeline had scuttled the delivery of gas to six power plants.

    It said this led to a drop in power generation by 1,087 megawatts and compelled the company to embark on load-shedding.

    It stated that the load-shedding was adopted to maintain stability of the national grid, thus avoiding total power system collapse.

    The affected power stations included Ihovbor, Azura, Omotosho gas, Geregu gas, Olorunsogo gas, Sapele and Egbin Power Station, which has managed to generate 60MW only on each of its units, losing a total of 211MW.

     

     

     

     

  • 1143Mw recovered as Escravos-Lagos pipeline resumes gas supply

    1143Mw recovered as Escravos-Lagos pipeline resumes gas supply

    • Govt to expand network for stranded   2,000mw

    The Escravos-Lagos Pipeline (ELP). damaged by fire last week, has been fixed, resulting  in gas supply to customers on the line, including power generating companies.

    The resumption of gas supply, has also led to the recovery of  1143Megawatts lost to the incident.

    The Nigerian National Petroleum Corporation (NNPC), which made this known yesterday in a statement, said the repair work  followed the directive by the Group Managing Director, Dr. Maikanti Baru, to carry out an assessment of the damage with a view to getting a prompt solution.

    The statement, issued by  NNPC Group General Manager, Group Public Affairs Division, Ndu Ughamadu, said a section of the ELP at Abakila in Ondo State blew up in flames on January 2, 2018 as a result of bush fire, saying  the accident affected gas supply to customers in Ondo, Ogun and Lagos states, with subsequent shutdown of a number of power plants.

    He said with the restoration of the ELP and resumption of gas supply, the affected power plants with a combined generating capacity of 1143Mw, are now in a position to resume power generation soon.

    Ughamadu listed the affected power plants to include: Egbin in Lagos State; Olorunshogo, PEL Olorunshogo and Paras Power plant in Ogun State; and Omotosho in Ondo State.

    The 36-inch Escravos to Lagos Pipeline System (ELPS), is a natural gas pipeline built in 1989 to supply gas from Escravos in the Niger Delta, to various consumption utilisation areas, in the South-west and also feeds the West African Gas Pipeline System.

    Meanwhile, the Minister of Power Works and Housing, Babatunde Fashola, said yesterday that the ministry plans to expand the distribution network of the electricity Distribution Companies (DisCos) to incorporate the 2,000Mw that has been stranded.

    He said: “We are putting together a policy to help expand the distribution network of the DisCos and use this to distribute the 2000Mw  currently available, but cannot be distributed.”

    He called on manufacturers to make available information on their location and the amount of power they need from the undistributed 2,000Mw.

    Fashola, who spoke at the 23rd Monthly Power Sector Operators meeting in Lafia, Nasarawa State, urged the sector to work harder this year to increase people’s access to meters and reduce the incidents of estimated billing, stressing that the Nigeria Electricity Regulatory Commission (NERC), would conclude the Meter Regulations that will open up the meters’ supply and installation business.

    FasholaHe regretted that in the “first few days of the new year, we suffered a set back to our power supply which was caused by damage to the gas supply network around Okada.”

    He said NNPC had last night informed the ministry on the completion of the repairs, saying what was left was to test the lines and restore pressure and supply gas to the generation companies.

    Fashola said: “One-by-one, all the stakeholders from GenCos, TCN and DisCos will work to restore supply to the levels they were before the pipeline damage,” saying a few months ago, the Nigerian Electricity Regulatory Commission (NERC) formally presented the Mini Grid Regulations to the government.

    He said last month in Abuja, Nigeria through the Rural Electrification Agency,  hosted a Mini Grids Summit that is the largest ever attended in Africa with 600 participants from about 40 countries.

    Fashola said the emphasis now is on “mini grids that will help us connect more people and boost incremental power.”

    Giving account of the progress that has been made so far, he said generated  power has gone up to 7000 Mw in 2017 from 3,000  Mw in May, 2015, adding that  Transmission Capacity has peaked at 6900Mw in 2017 from  about 5,000  Mw in May 2015..

    He said “Distribution was now averaging 5,000 Mw in 2017, as against its 2650Mw  in 2015.”

  • Rivers, Shell sign MoU on gas supply

    The Rivers State Government and Shell Nigeria Gas (SNG,have signed a Memorandum of Understanding (MoU) for the distribution of gas to industries in the Greater Port Harcourt area and its environs.

    MoU sets out broad terms and conditions to guide co-operation between the two parties in the development of new gas distribution opportunities in the Greater Port Harcourt area and its environs, in addition to its existing gas distribution network in the State.

    “The agreement is key to government’s efforts aimed at boosting industrialisation in Rivers State,” said Richard Hart, Permanent Secretary,  Ministry of Energy and Natural Resources, who signed for the government.

    He said: “We believe that the agreed terms in the MoU will lead to the signing of the “Build-Operate-Own-and Transfer” (BOOT) agreement early next year, so businesses can begin to reap the benefits of a steady source of energy.”

    SNG Managing Director, Ed Ubong, who also signed for hiscompany, said the partnership was an opportunity to further promote gas as a more reliable, cleaner and cost-effective alternative to liquid fuels in the Niger Delta.

    “Gas is the key to boosting industrialization. It is no coincidence that states that currently do well on internal revenue generation have also encouraged the use of gas to boost industrial output, which in turn provides employment and improved livelihood, Obong said, adding that SNG is grateful to the Rivers State government for the foresight and co-operation in signing  the MoU, and will reciprocate the gesture by taking every step to fulfill its obligations in the agreement.

    In his comment, Country Chair, Shell Companies in Nigeria, Osagie Okunbor harped on the leadership role of Shell in the domestic gas market, saying, “for more than 50 years, Shell has been in the forefront of the campaign to develop and monetise Nigeria’s huge resources and it is good to see SNG continuing in the tradition to grow the domestic gas market and also help to improve lives and earnings in Rivers State.”

     

  • Plans to boost gas supply underway

    Plans to boost gas supply underway

    Plans are afoot to allow power firms access sufficient gas as power generation hits 4,000 megawatts (Mw) of electricity,it was learnt at the weekend.

    For this to happen, the Federal Government, the House of Representatives’ Committee on Power and the gas marketing companies are brainstorming on the appropriate strategy to deploy.

    The discussions, it was learnt, centered on how to explore alternative sources of providing gas for the turbines to boost power supply.

    House Committee on Power Chairman, Hon Daniel Asuquo, said the committee was discussing with the relevant stakeholders on how to fast-track gas supply to the power generation companies (GenCos).

    Asuquo told The Nation at the weekend that the committee was performing its oversight functions of monitoring the power firms, as well as making efforts to boost electricity supply.

    He said: ‘’Currently, the Committee is advising Federal Government and gas companies to look for new fields as part of efforts to improve power generation. We are telling the government and the gas marketing firms to look beyond Niger Delta for gas procurement. The reason is because militant’ activities are affecting gas production in the region.”

    He added that there are non-associated gas fields outside the Niger Delta region, urging investors to leverage on the fields for growth.

    According to him, the fields, when explored, have the capacity to produce enough gas for the turbines.

    He said, by so doing, the country would be able to boost power supply and further move from violent agitations in the Niger Delta region and its effects on the oil and gas industry.

    Asuquo said a system, through which gas firms would distribute emergency gas to where the power companies are located, should be put in place.

    He said interventions from other countries would help Nigeria achieve its energy potential, urging it to emulate Ghana and other countries, which have taken similar steps.

    He explained that a combination of off-grid and on-grid methods of generating electricity has helped countries in the developed economies to achieve energy efficiency and economic growth.

  • NGA: market forces to drive gas supply

    Domestic Supply Obligation (DSO) of gas should be predicated on willing buyer-willing seller basis, the Nigerian Gas Association (NGA) has said.
    The body, which made its stance known at a stakeholders’ forum on the draft National Gas Policy organised by the Ministry of Petroleum Resources in Abuja, said relying on the Gas Aggregation Company of Nigeria Limited (GACN) process could not guarantee the desired volumes to domestic market irrespective of the assignment of DSO to operators.
    This is because, it said, the aggregation process could not support bankable transactions as it introduces an undue layer of uncertainty to the income stream of projects.
    “While we support the allocation of DSO to producing companies, we believe that the national objective of guaranteeing sufficient gas volumes to the domestic market can be better achieved if such DSO policy is implemented on a willing buyer, willing seller basis,” the NGA stated.
    On gas pricing, NGA noted that the 2008 Domestic Gas Supply Pricing and Regulation had contemplated a five-year transition period from 2008 to 2013. However, rolling out a new policy with an indeterminate transition period eight years after, is far from encouraging particularly as the triggers for the Wholesale Market Regime and end of regulated pricing suggested in section 4.3.8 of the draft policy seem to be very far-fetched and mostly unachievable within the short to medium term.
    “We strongly support a move towards deregulated pricing on a willing buyer-willing seller basis while retaining the existing regulatory approvals by NERC of prices for gas to power transactions,” said Dada Thomas, NGA President.
    According to the NGA Publicity Secretary, Frank Uzuegbunam, the draft policy appears to be “too detailed and prescriptive and runs the risk of ultimately conflicting with supporting regulations when put in place’’.

    The association believes that one major problem for legal separation of upstream and midstream companies as contained in the draft policy is that it will negatively impact existing commercial structures with significant additional tax costs and could end up being a barrier to further investment rather than opening up the sector to increased competition.
    “The Policy’s objective to incentivise investment in midstream sector may be hampered by forcing a legal separation between upstream and midstream companies. The Policy should encourage all types of partnerships between upstream producers and midstream participants including vertical integration down the value chain. New entrants who choose to play in a single part of the chain should be adequately protected by legislation/regulation,” NGA said.

  • Debt cripples gas supply to power

    Debt cripples gas supply to power

    The huge debt incurred by operators in the gas value chain, is hindering electricity generation and distribution in the country, the Group Managing Director, Aiteo Power, Dr Ransome Owan has said.

    He said stakeholders were only looking at the issue of perennial gas scarcity from the angle of pipeline vandalism, without considering the financial bottlenecks affecting the transportation and utilisation of gas in the power sector.

    He said the issue of payment for gas used in firing turbines is becoming a challenge among stakeholders especially the gas producers, and power plants owners.

    Owan, who spoke during a stakeholders’ forum in Lagos, said gas producers, power generation companies (GenCos) and power distribution companies (DisCos) have stories to tell on the issue of payment for gas supplied and utilised.

    He said: “If you ask gas producers how much they are being owed by power generation firms, they would tell you it is a lot of money. Also, the gas powered plants are being owed by DisCos, which do not have enough money to pay for the electricity they buy from GenCos. Based on this, the issue of debt affects all stakeholders in the value chain.

    “This means that gas pipeline vandalism is not the only critical problem in the power sector. The issue of debt, arising from inability of the operators to pay for gas is another major problem besetting the growth of the sector.”

    Also speaking, the Managing Director,  Frontier Oil Limited, Thomas Dada, said further investment is required in the gas sector in order to ensure availability of the product to improve power generation.

    He said there are whole lots of problems affecting the growth of the power sector, advising the Federal Government, gas producers, and other stakeholders to work together in order to make the gas market stronger and competitive.

  • Debt cripples gas supply to power

    The huge debt incurred by operators in the gas value chain, is hindering electricity generation and distribution in the country, the Group Managing Director, Aiteo Power, Dr Ransome Owan has said.

    He said stakeholders were only looking at the issue of perennial gas scarcity from the angle of pipeline vandalism, without considering the financial bottlenecks affecting the transportation and utilisation of gas in the power sector.

    He said the issue of payment for gas used in firing turbines is becoming a challenge among stakeholders especially the gas producers, and power plants owners.

    Owan, who spoke during a stakeholders’ forum in Lagos, said gas producers, power generation companies (GenCos) and power distribution companies (DisCos) have stories to tell on the issue of payment for gas supplied and utilised.

    He said: “If you ask gas producers how much they are being owed by power generation firms, they would tell you it is a lot of money. Also, the gas powered plants are being owed by DisCos, which do not have enough money to pay for the electricity they buy from GenCos. Based on this, the issue of debt affects all stakeholders in the value chain.

    “This means that gas pipeline vandalism is not the only critical problem in the power sector. The issue of debt, arising from inability of the operators to pay for gas is another major problem besetting the growth of the sector.”

    Also speaking, the Managing Director,  Frontier Oil Limited, Thomas Dada, said further investment is required in the gas sector in order to ensure availability of the product to improve power generation.

    He said there are whole lots of problems affecting the growth of the power sector, advising the Federal Government, gas producers, and other stakeholders to work together in order to make the gas market stronger and competitive.

  • Why gas supply is low, by NGC

    • Nigeria loses N2.5b to pipeline vandalism in six months

    The Nigerian Gas Company Limited (NGC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC), has listed factors that militate against the development, supply and monetisation of the huge gas resource in the country.

    Its Managing Director, Mr. Dafe Sejebor, said these issues are reasons expectations on supply are not being met.

    He said huge volume of gas meant for the domestic market is lost from the time of vandalism to detection,  about 150 million standard cubic feet per day (MMscf/d).

    He noted that the huge amount is also spent on repairs of the vandalised pipes,  adding that about N2.5 billion was spent on pipeline repairs between January  and June, this year.

    He also said the reluctance of upstream oil and gas companies to invest in domestic gas production as well as uneconomical gas-to-power price framework is stalling growth of the gas industry.

    He said the inadequate funds for infrastructure development and limited appetite of Nigerian banks to invest in long to mid-term projects as well as host community issues, work against the industry’s growth.

    Sejebor, however, said the government was working to address the issues. He said the gas sector reforms are underpinned by a set of enabling policies that are being implemented to jumpstart the gas industry agenda.

    Among the policies being implemented include scalable infrastructure, gas pricing regime to sustain supply growth in the long term and world class and bankable gas supply and purchase agreement (GSPA) and the gas network code while transmission tariff is pegged at a minimum of $0.80 MMscf to justify investments on gas infrastructure.

    He noted that the World Bank Partial Risk Guarantee is also mitigating against non-payment for gas sold adding that investors have been assembled for the Central Processing Facilities (CPF) ) for Western CPF and final investment decision (FID) is expected to be taken in 2016.

    To further boost gas development, the NGC chief said the company is in discussion with current gas producers in the country to boost output. The gas producers include the international oil companies (IOCs) such as Chevron and Shell, and indigenous companies such as Nigerian Petroleum Development Company (NPDC), Pan Ocean and Seplat as well as potential gas producers for more gas production especially from their non associated gas (NAG) assets. The potential producers include ND Western Oil, Seven Energy, Owel Linkso, and Sunlink, among others.

     

    He stated that it is imperative to for indigenous firms to participate in gas infrastructural development because they have come of age. “Indigenous companies have come of age and are competing favourably with their foreign counterparts. They are now taking control of lucrative pipeline construction projects and are creating employment opportunities. The engagement of several Nigerians as skilled and unskilled staff has helped to reduce the restiveness in the Niger Delta and also reduce the rate of unemployment in Nigeria as a whole.

    “In view of the need to ensure that indigenous contractors have access to funds to execute its projects, Shell/NNPC Joint Venture entered into an understanding with a selected group of Nigerian banks in 2012, while the Central Bank of Nigeria (CBN), in a recent statement indicated that increased activities by indigenous companies contributed to the appreciation of the Naira against the Dollar and other currencies,” he added.

     

  • Fed Govt plans increase of gas supply to Lagos

    The Federal Govern-ment is working to make up the natural gas supply shortfall of 400 million standard cubic feet per day (mscf/d) to the Lagos axis for power plants and other industrial concerns before the end of this year, it was learnt.

    The Group Executive Director, Gas and Power, Nigerian National Petroleum Corporation (NNPC), Dr David Ige, told The Nation that the state-run oil firm is working hard to ensure that the gas supply gap is completely closed before end of August to improve power supply.

    He said the Escravos-Lagos Pipeline Project is expected to be completed within that period, which will significantly boost supply to the Lagos axis. He also noted that pricing issue is no longer responsible for inadequate gas supply for domestic usage including the power plants as the current domestic gas price is competitive.

    He said: “We are making a lot of progress in terms of constructions on both the East and West pipelines. We expect that by December next year, we would have the mechanical completion of the pipeline and by early 2017, we will start to flow gas through them.

    “Lagos pipeline is almost completed, we expect that between now and end of August that project would have been completed. We have completed and inaugurated Lagos to Oben, completed Emure to Itoki and the bit that remains now is from the Benin end to Emure and that is progressing very well. The expectation is that before end of August this year, the Escravos-Lagos Pipeline would have been completed and would have doubled the capacity of the pipeline to two billion standard cubic feet per day (bscf/d) of gas. That volume will make it the biggest pipeline in Africa.

    “On the Eastern side, we have gas. For example, we have gas at Gbarain-Ubie power plant in Bayelsa State, which we hope to commission shortly, we have gas at Omoku in Rivers State, which is awaiting the power plant and we have gas at Egbema in Imo State. The gas supply to the power sector was over Ibscf/d and we expect that by the end of this year, we will make significant increase in that.

    “Cumulatively, we produce 2bscf/d and some of the gas we have available is probably stranded may be because some of the power plants are not ready. Over the next couple of months, we will see a bit of increase in gas supply. However, not all these gas volumes are in active generation today. It is either the power plant is not ready or the power evacuation is not ready.”

    Ige also said contrary to reports, pricing is no more responsible for lack of gas supply. He noted that the challenge is that gas consumers don’t pay for the gas they take; hence the gas debt was so huge at a time that the Central Bank of Nigeria (CBN) had to intervene.

    He said: “I’m not sure gas pricing is an issue for producers and consumers because gas price has been increased to export price in Nigeria. The issue today is not pricing really. What has remained a challenge in Nigeria is the mounting debt because the gas price is not being paid by the consumers at the rate they supposed to pay. A couple of months ago, the CBN put a programme in place to extinguish some of the legacy debts. But we will ensure that the new volumes that are being supplied are actually being paid by the end consumers through power operators back to gas suppliers. I believe that right now the issue is not the price; it is the collection and the payment. Our price now is at par with that of Henry Hub.”