The Nation Newspaper

Tag: Gas

  • N110b debt cripples gas producers

    N110b debt cripples gas producers

    The President, Nigerian Gas Association (NGA), Dada Thomas yesterday lamented that players in the gas industry are running out of cash as a result of the N110 billion debt customers are owing gas producers.

    Thomas, who is also the Managing Director, Frontier Oil Limited, spoke to reporters at the ongoing NGA conference in Abuja.

    He said the intervention of the Central Bank of Nigeria (CBN) to gas producers was still negligible because all the electricity generation companies (GenCos) in the country operating thermal plants depend on gas.

    He said: “ Every session (in this conference) has talked about the liquidity in the power sector and that liquidity is virtually terminal. By terminal, it means the patient is already collapsing and if pushed a little bit, that’s its end. The problem in that sector needs to be fixed. Gas producers are owed more than N110 billion right now.

    “The CBN intervention was just a drop in the ocean. So we have a serious problem. It is important to state that all GenCos who run thermal plants in Nigeria get their gas from gas producers. You can’t run a thermal power plant without gas.”

    He added that 80 per cent of the domestic gas consumed in the country is vended to the power plants that are still in the possession of the Federal Government despite their privatisation .

    “Also, 80 per cent of the domestic gas in this country today is sold to power  plants. But unfortunately these power plants are still in the possession of government, despite the so called privatisation which has not been properly concluded. We want the privatisation of the power sector to be fully concluded,” he said.

    He expressed optimism that on conclusion of privatisation, all the plants will become the entities of the investors who will run them as proper businesses.

    According to him, the producers would not vend gas on credit to the private investors, adding that dealing with government brings disruptions as credit denial would be interpreted as economic sabotage

    He said: “When it is fully concluded, then every power plant will be in the hand of a private investor. That is when we can talk properly as business entities. If you are a private investor, I will not give you my gas on credit. You must pay me to get supply. But with government, it is a different ball game; if there are disruptions, they will accuse you of economic sabotage while they are owing you all kinds of money.

    “If you are a private investor and you buy this power plant today and I sold gas to you for one month and I say where is my money and you keep telling me stories, after two months, I’ll have no choice but to shut you off. You are a profit making organisation and so why should l be subsidizsing your business?”

  • Panic as ‘militants’ blow up pipeline in Edo

    The people of Azaka, Iguiye and neighbouring communities around the Ovia River in Edo state were thrown into confusion on Friday night as loud explosion erupted at a facility of the Nigeria Gas Company (NGC) in the area.

    It was suspected that a valve station located around a power line was damaged by the explosion.

    Although what caused the explosion was not clear at the time of this report on Saturday morning, some locals told our reporter that they suspect that it was bombed by militants.

    “We saw pieces of gas cylinder and other things that might have been used to blow up the station,” one local said.

    Mr. Anthony Odoyibo, a well known farmer in the area, confirmed the report and appealed to Nigerians to give peace a chance.

    “We heard a very loud explosion around 10 or or 11pm. Everybody was very afraid. Some people who went there confirmed that it was the pipeline that was blown up,” Odoyibo added.

    However, no militant group has claimed responsibility for the attack at the time of this report.

  • Comprehensive policies on gas coming

    Comprehensive policies on gas coming

    The Federal Government is making arrangements to finalise and gazette various gas policies by December to enable users across the value chain to have access to the product, The Nation has learnt.

    The policies, which cover  oil and gas operation, include the National Gas, Downstream Sector, and Upstream Policies.

    It was gathered that the Federal Government, through the Ministry of Petroleum Resources and the Nigerian National Petroleum Corporation (NNPC), had ordered top officials of the Ministry and the parastatal to ensure that various gas policies initiated few years ago were reviewed.

    The government, it was gathered, would have finalised the policies a long time ago, but was constrained by incoordination.

    A source, who spoke on condition of anonymity, said the policies would help in reshaping the sector.

    ‘’Based on this, oil and gas operators, including those in the power, petrochemical and other sectors, would be able to get gas as at when due, for operation. The reason is because the policies would address the bottlenecks affecting the construction of pipelines and supply of gas to the various end users in Nigeria,” the source said.

    The Minister of State, Petroleum Resources, Dr Emmanuel Kachikwu, hinted during a stakeholders’ forum in Lagos that the comprehensive gas policies would roll in soon.

    He said the policies are the only major way of enhancing potential in the economy.

    According to the minister, the government was bent on making the gas market highly productive, adding that the idea would provide support for the economy, which is struggling to survive.

    He said the potential in gas now is higher gas when one considers the downturn in the global oil market and its attendant fall in the international prices of crude oil, stressing that the government is working hard to make the gas segment of the petroleum industry, more viable.

    Also, the Chief Executive Officer, Frontier Oil Limited, Mr Thomas Dada, said Nigeria needs comprehensive policies that would accommodate varying interests.

    He said the problems include bursting of pipelines, shortage of gas, lack of enough gas for power generation companies and other users, urging the government to provide policies that are detailed, accurate, and also take of operators, irrespective of their sizes.

     

  • Dangote buys $12b foreign gas firm

    Dangote buys $12b foreign gas firm

    Dangote Industries Limited (DIL) has bought Twister B.V., a company headquartered in the Netherlands delivering reliable, high-yield and robust solutions in natural gas processing and separation to the upstream and midstream oil and gas sectors.

    Twister’s unique separation capabilities are designed for augmenting production and streamlining processes, to capitalise on high-yield gas processing for maximising revenues.

    Based on sophisticated patented technology, Twister gas plants are cheaper to build and operate compared to alternative technologies, and deliver better performance. The company has customers in Nigeria, Malaysia, and South America.

    The acquisition complements DIL’s portfolio of investments in the upstream, midstream, and downstream segments of the sector. The company will help design and build the gas plants, which will be critical in processing gas from oil fields for transportation via Dangote’s planned sub-sea pipeline (EWOGGS) for ultimate consumption by industries and power plants.

    Aliko Dangote, president & chief executive officer of Dangote Industries Limited said: “This is an important acquisition for us. Twister’s cutting edge gas processing technology is fundamental to delivering our strategy to unlock about 3 bcfd of gas to meet Nigeria’s gas needs.”

    Twister’s Chief Executive Officer  John Young said:  “We are delighted in the confidence DIL and First E&P have shown in Twister…  After a thorough due diligence our technology has been recognised as a key enabler to reduce gas project costs, which is crucial in this environment. We are excited to be part of the Dangote family of companies.”

  • Investments in oil, gas free zones hit $75b

    Investments in oil, gas free zones hit $75b

    Investments in  Nigeria’s oil and gas free zones has hit $75 billion. It has also created more than 200,000 direct and indirect jobs from 150 companies, it was learnt yesterday.

    The Managing Director and Chief Executive, Oil and Gas Free Zones (OGFZs) Authority, Mr Umana Okon Umana, has restated his determination to sustain the growth and ensure full realisation of the mandate for which it was set up.

    Speaking after taking over the mantle of leadership at the free zones authority at Onne, Rivers State, Umana pledged to “ensure the OGFZs Authority operates according to its mandate to attract foreign direct investments and local investors to the nation’s oil and gas free zones to accelerate the pace of economic growth and development, especially at this time when government is taking steps to end the recession.”

    He pledged “to work in harmony with all stakeholders in the free zones such as the Nigerian Customs Service (NCS), the Nigerian Port Authority (NPA), Department of Petroleum Resources (DPR), and the Nigerian Immigration Service (NIS) to ensure that the primary objectives of the Federal Government of driving economic growth and development, and of generating employment through the oil and gas free zones is actualised.”

    He called for cooperation, total commitment and professionalism from management and workers of the authority in the execution of the task at hand. He said getting the new OGFZs Authority to rise to its huge potential will require thinking out of the box and adopting the best model of public-private partnership.

    “While working to ensure that the existing oil and gas free zones are maximally utilised, we will take necessary steps to ensure that new oil and gas free zones such as Brass and Ibaka where preliminary work had already begun are fully established and become operational,” Umana promised.

    He thanked President Muhammadu Buhari for giving him the opportunity to serve the nation and described the appointment as a platform to contribute to ongoing efforts reposition the country for economic growth and prosperity.

  • NDPHC chief seeks support for indigenous gas firms

    To get the required volume of gas   for  thermal power stations, the Federal Government should support indigenous oil and gas firms to increase their output, Niger Delta Power Holding Company (NDPHC) Acting Managing Director Mr. Chiedu Ugbo has said.

    According to him, some of the indigenous oil and gas firms that are in the forefront of domestic gas supply include Accugas, GigaGas, Seplat Plc, and Shoreline.

    Ugbo, who spoke to The Nation on the importance of supporting the indigenous firms, said lack of robust mechanism for gas payment has made international oil firms (IOCs) that are major oil producers to shun local supply.

    He said: “Enormous resources are often expended in developing gas fields and the associated transportation infrastructure to deliver gas molecules for power generation. There is need for guaranteed payment for gas to ensure recovery of capital invested and return on investment.

    ‘’Also, given the poor payment history of the power industry, securitisation of the Gas Sales Agreement (GSA) payments has been a huge challenge for the consummating commercial transactions and achieving financial closure for the projects that requires drilling, gas processing and construction of pipelines.’’

    Ugbo added: “A lot of associated gas is being flared because the IOCs, who are the owners of these fields, are not interested in developing them under the gas aggregation framework of the government. There is thus the need for a well publicised framework to be put in place for an interested investor or developer to have access to this gas in an existing production sharing contract (PSC), oil mining lease (OML) or oil prospecting lease (OPL) as well as a ‘willing seller willing buyer’ arrangement encouraged. In essence, there must be a flexible application of the aggregation framework. This policy was put in place to jumpstart gas availability and has a regulated price regime,” he said.

    The NDPHC chief said under the policy, all IOCs/gas producers must allocate a portion of their gas production to the domestic supply obligation (DSO0 mainly for power generation before they can allocate any gas for other commercial commitments or obligations. Recently, there has been growing call for a ‘willing buyer/willing seller’ arrangement rather than the regulated price regime which now seems like a straight jacket for the industry, he added.

  • More firms to close shop over gas price, says MAN

    The Manufacturers Association of Nigeria (MAN) has  said more firms are set to close shops following  the the scarcity and high cost of gas.

    Speaking with reporters at the MAN House in Ikeja Lagos yesterday, its Chairman, Gas Users Group, Dr Micheal Ola Adebayo said the issue of high cost of natural gas has persisted for some time now and has reached a crisis point as most factories have stopped production and are about to shut down.

    He said: “Manufacturers are constrained to draw the attention of the Federal Government and the general public to the issue of persistent increase in the price of  natural gas used by manufacturers to power their plants and machinery by the gas franchisers.

    “ Some of our members are about to shut down their operation due to non-supply of gas to power their operations on the other hand, and the current exorbitant and dollarisation pricing of the available ones on the other.

    “Infact, some of our factories have been threatened with disconnection on account of their inability to pay for the increase price.“

    Adebayo said the growth of the manufacturing sector is currently being hampered by the huge cost of energy crisis occasioned by power outages and high cost of petroleum products in the country, adding that the incessant increase in the price of gas will not only be punitive but add to the woes of the sector.

    According to Adebayo, the high cost of gas has led to high  production cost with energy now accounting for over 45 per cent of total production cost. He added that it has constributed to low capacity utilisation in the factories and made locally produced goods to be uncompetitive.

  • Shell declares force majeure on gas to NLNG

    Shell declares force majeure on gas to NLNG

    Royal Dutch Shell said its local unit, Shell Petroleun Development Company (SPDC), has declared force majeure on gas supplies to Nigeria Liquified Natural Gas (NLNG) plant because of a leak, potentially exacerbating a decline in exports for the Organisation of Petroleum Exporting Countries (OPEC) member that’s suffering from militant attacks on energy infrastructure.

    “The pipeline has been shut down for a joint investigation visit into the cause of the leak and repairs,” Natasha Obank, a Shell spokeswoman, said in a statement. The leak occurred on the Eastern Gas Gathering System (EGGS-1) pipeline which supplies the bulk of Shell’s gas to the NLNG plant on Bonny Island. However, some supply continues through other pipelines, Shell said

    Nigeria’s government has resumed payments to former militants and is attempting to establish talks to end attacks on pipeline infrastructure in the oil-rich Niger Delta that has sunk crude production to almost a 30-year low. Output has fallen to 1.4 million barrels a day, Minister of State for Petroleum Resources Emmanuel Kachikwu said earlier this month.

  • Gas development key to 40,000mw attainment, says oil producers

    For the Federal Government to achieve its 40,000megawatts (mw) power generation target from the current 4,000mw, it must develop its gas resource, experts have said.

    The Oil Producers Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry, which consists of exploration and production firms stressed the need to expand domestic gas as a key enabler to power sector growth.

    In its presentation, the oil firms said OPTS is the cornerstone of the exploration, development and production of Nigeria’s petroleum resources, adding that in 2016 its 24 members accounted for 90 per cent of Nigeria’s oil and gas production – either in partnership with the Nigerian National Petroleum Corporation (NNPC) or with other local and international lease holders.

    The Managing Director of Shell Petroleum Development Company Limited (SPDC) and Country Chairman of Shell Companies in Nigerian (SCiN), Mr. Osagie Okunbor, who represented the OPTS chairman Neff Clef said gas development is key to realising the aspiration of 40mw generation and requires an approximate seven-fold increase in domestic gas supply for power generation alone and even more, if we consider industrial needs. This represents a huge development opportunity for Nigeria’s gas industry, it added.

    According to him, the important role of natural gas for the development of our economy cannot be over-emphasised in our drive to become one of the top 20 economies in the world. Identifying and implementing measures that capture the potential of the gas industry requires a deliberate collaborative effort between government and key stakeholders, he added.

    He said: “With 181 trillion cubic feet of proven gas reserves, and multiples of this figure in undiscovered gas resources, OPTS believes that Nigeria has the potential to be a gas super-power. These reserves place Nigeria as the largest in Africa and the ninth largest in the world.

    “However, only about 25 per cent of those reserves is being produced or under development today. The remaining 135 trillion cubic feet of proven gas is not associated with any planned development. And, there is virtually no active exploration in search of new gas reserves.

    “The total power potential of these discovered, but undeveloped reserves represent 68 years of 40,000mw compared to today’s power generation of approximately 4,000mw. With the largest proven gas reserves in Africa, Nigeria has the potential to be a gas super-power.”

    The group noted that providing enabling commercial and fiscal terms, and ensuring a conducive business environment, which includes providing a secure operations environment, will help in achievement of that level of power generation.

    It also noted that the Central Bank of Nigeria (CBN) has taken a commendable step of providing a mechanism for partial repayment of gas invoice arrears. However, since this mechanism was announced in August 2014, power sector gas invoice arrears have actually grown from a reconciled N40 billion of undisputed arrears in December 2014, to about N100 billion according to NNPC’s estimate of May 2016. The current system is simply not working. It is vitally important to settle the outstanding debts and establish bankable credit support facilities for future gas sales. Without these assurances, it is unreasonable to expect investors to commit additional investments to grow domestic gas supply, it added.

  • NNPC mulls 3bscf/d domestic gas supply by 2017

    NNPC mulls 3bscf/d domestic gas supply by 2017

    The Nigerian National Petroleum Corporation (NNPC) is  to increase domestic gas supply to three billion standard cubic feet per day (bscf/d) by the end of next year and 7bscf/d by 2020, it was learnt at the weekend.

    As at last January, domestic gas supply stood at about 1.3bscf/d, but by end of last month, it dropped by over 100 per cent to 500 million standard cubic feet per day (mmscf/d) due to renewed attacks on pipelines by the Niger Delta militants.

    To scale up industrial activities , NNPC  is targeting additional 2.985 bscf/d gas supplies by the international oil companies (IOCs) aside the 2.460bscf/d their  projects can supply.

    The national oil firm is also eyeing 1.895 bscf/d of gas from the Nigerian Petroleum Development Company (NPDC), an arm of NNPC and recovery of 1.605bscf/d from repair of vandalised pipes. Also it is fast-tracking the construction of the Obiafo/Obrikom/Oben (OB3) pipeline at 70 per cent completion and expected to be completed by last quarter of next year, and the Escravos-Lagos Pipeline System (ELPS) Phase 2, which is at 76 per cent completion and expected to be completed by third quarter of this year.

    The OB3 pipeline is planned to supply gas to Geregu PHCN and NIPP plants, Egbema NIPP, Alaoji and Calabar NIPP, and Okpai power plant, among others, while ELPS 2 will feed Olorunsogo PHCN and NIPP, Sapele power plant, Omotosho PHCN and NIPP, Ihovbor NIPP, and Egbin power plant.

    The NNPC source said: “Some of the NNPC intervention programme include connecting all existing power plants to permanent gas pipeline, resolve community interference through aggressive dialogue and engagements with stakeholders, and repair the damaged ELPS 1 and restore gas supply to the west.

    “We (NNPC) will ensure delivery of the NPDC and IOCs short term projects, complete ELPs II and OB3 gas pipeline projects, secure funding to actualise the identified upstream gas development that will enable additional 7bscf/d gas supply to meet the projected demand by 2020, complete the production sharing contract (PSC) gas terms to enable market the huge offshore gas resources, and progress the development of Gas Based Industries.

    “The Corporation will also evaluate the possibility of installing gas storage for security of supply and to edge against contract risk, evaluate option of regasification of liquefied natural gas (LNG) as a strategic intervention for alternative gas supply in case of outages of pipeline, evaluate flexibility in the pipeline system to flow of gas between domestic and export without jeopardising existing contractual arrangements.”

    He noted that based on all known domestic gas supply projects, base case supply is forecast to grow to 4.7bscf/d by 2020, this implies an imminent shortfall of about 2.9 bscf/d. In fact, from 2019 the base case gas supply does not even meet the power demand projection, he added.