Nigeria Gas
A lot of investment opportunities abound in the
natural gas sector of the Nigerian petroleum industry. Increasing attention
is now being given to this vital sector. Government's aspirations for the
gas sector include creating new industries out of the old oil industry;
capturing economic value and generating as much revenue from gas as from oil
by 2010. Others are developing the domestic gas market and, ending gas
flaring by 2008.
Remarkable progress has been recorded towards the realization of these
objectives. Of the current annual gas production of about 2,000 Bscf, about
40% is flared. This is a drastic drop from the 70% proportion flared before
the advent of this administration. The hitherto flared gas is being
channeled into gas powered projects for rapid utilization and monetization
with a view to maximizing value addition to the nation's natural gas
resource by 2010.
Domestic
gas consumption is expanding as a result of the ongoing power sector reforms
while gas export which was non-existent prior to 1999, has received a strong
boost.
Comprehensive and integrated gas utilization Master plan/programmes have
been embarked upon, in which LNG and IPP developments are being given
priority. The expected increased export earnings from LNG, coupled with
adequate domestic power supply from IPPs, will strongly support and broaden
economic expansion and urbanization, increase the income generating capacity
of Nigerians and lift the general wellbeing. It will further reinforce
Government's efforts towards integrating the Host communities into the
mainstream of national development and growth.
Many
gas-based projects are being undertaken in line with Governments aspirations
in the sector. They include:
Gas Projects
As a result of
various projects established, total gas utilized in the country increased
from about 197 million scf/d in 1999 to about 573 mmscf/d in 2004.
Substantial demand growth is expected in this decade. Consequently, domestic
demand for natural gas is expected to increase to about 1700mmscf/d by 2010.
Investment opportunities therefore abound in the domestic gas market
Government is
encouraging JV and PSC multinational oil companies operating in Nigeria to
embark on IPPs, as part of the Power Sector reform. The Reform Act reviewed
the generation, transmission and distribution of electricity in the country
to improve its performance. The IPPs will not only boost electricity supply
but also, provide necessary infrastructural support for economic growth, and
also guarantee additional revenue to the participating JV/PSC companies. The
IPPs will further strengthen the oil companies' social responsibility in the
local economy as well as protect the environment through environmentally
sustainable operations and industry best practices. The various IPPs are
expected to contribute about 3000 MW to the national grid by 2007. This
strategy will ensure the realization of Government's intention to increase
the national electricity generation from the current 4,000 MW to about
10,000 MW by 2010 to enhance economic activities.
Since production started from trains 1& 2 in 1999,
NLNG has been one of the fastest growing endeavours in the world. Train 3
was commissioned in November 2002 while 4 and 5 are expected to be on stream
soon. When Train 6 is added in 2007, LNG output will total about 22 metric
tons per annum.
In addition, the Brass LNG with 2 trains and an output of 10mtpa is expected
to be on stream in the first quarter of 2009 while the Olokola (OK) LNG
which is a 4 train plant with an output of 20mtpa will have the first 2
trains commissioned in 2009/2010.
The Final
Investment Decision of the West Africa Gas Pipeline was signed on 16th
December 2004. The initial capacity utilization of the pipeline which is 200
mmcf/d is expected to increase to about 460 mmcf/d by 2026 This project
which is of strategic importance is expected to foster cooperation and
economic development in the sub- region in the spirit of the New Partnership
for African Development (NEPAD).
A Tran Saharan
gas pipeline running from Nigeria to Algeria is under consideration. The
objective is to make Nigerian piped gas available to Europe. The technical
and commercial viability of this project is however being studied through a
feasibility study being undertaken by a consultant on behalf of NNPC and
Sonatrach.
These include the Escravos Gas- to- Liquids with a
capacity of 34,000 barrels per day, the Escravos Natural Gas Liquids 1, 2 &
3 as well as the Mobil Natural Gas Liquids 1& 2.
In totality, on going gas transmission programmes would entail
commercialization of about 14,750 mmscf/d of gas by 2011 (80% for LNG).
However, about $2.5billion will be required annually in stable investments
(upstream and LNG plants) to capture opportunities in gas and power by 2010.
The private sector therefore has a critical role to play in the realization
of these and other projects.
With these developments in the gas sector as well as the transformation in
the upstream, it is believed that energy sector driven initiatives could
contribute up to 60% towards doubling of the nation's GDP over the next 10
years.
