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Exploiting Potentials of LNG in Addressing Development Challenges of Nigeria

By Edith Ike-Eboh [NAN]

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In my salon and Spa, I spend on a daily basis, between N7,000 and N10,000, on petrol to keep my business running. It is tough but I am optimistic that one-day power supply will improve in the country to help me grow my business,” says Mrs. Victoria Justice, a Stylist and an entrepreneur in Kubwa, an outskirt town in the Federal Capital Territory, Abuja.

Justice is one among many young small business owners who battles to keep their businesses afloat because of the high cost of running their operations and activities, occasioned by poor electricity supply.

Nigeria is the largest oil producer in Africa and among the largest in the world and it holds the largest natural gas reserves on the continent as well as being the world’s fifth largest exporter of Liquefied Natural Gas (LNG) in 2018.

However, over the years, due to lack of use of its vast gas resources for its development, the country still suffers epileptic power supply, and it is overly reliant on petrol at the detriment of other cost-effective and cheaper energy sources.

This was what spurred the present administration to declare the year 2020 as the year of gas, and its determination to fast-track the completion of a number of delayed, neglected and abandoned gas projects and the commencement of new gas projects in some parts of the country.

Some of the gas projects include taking Final Investment Decision (FID) and award of the Engineering, Procurement and Construction (EPC) contract of the Nigeria Liquefied Natural Gas’ (NLNG) Train 7 project; Ajaokuta-Kaduna-Kano (AKK) gas pipeline project; completion of the Escravos Lagos Gas Pipeline System II (ELPS II) project; Integrated Gas Handling Facility (IGHF), Benin; Compressed Natural Gas (CNG), Liquefied Petroleum Gas Auto Gas project, among others.

This is in tandem with experts’ view that the country need to utilize it gas resources to facilitate economic growth and development.

Some of them are of the opinion that the challenge of power supply and hike in the increase in the Premium Motor Spirit (PMS) also known as petrol, can be solved with gas development and utilization in the country.

Prior to December 2019, when the Minister of State for Petroleum Resources, Chief Timipre Sylva, had declared 2020 as the ‘Year of Gas’, he had stated that the completion of the Nigerian Gas Flare Commercialisation Program remained paramount with associated gas focused deliverables that include deepening domestic gas penetration and adoption amongst others.

He had stated that government was committed to ensuring the elimination of gas flaring from Nigeria’s oil and gas fields by 2021 for enormous multiplier effect and development.

Sylva said Nigerian Gas Reserves were at 200.79 trillion cubic feet (TCF) as of January 1, 2019 with associated gas reserves slightly above 50 per cent and a total reserves life index of 92 years as of 2018.

According to him, the country is also one of the top 10 global gas flaring nations, with flaring standing at 321.29 billion cubic feet (BCF), representing around 10 per cent to 11 per cent of the total produced gas.

The minister said the government had demonstrated its commitment to ending gas flaring with the development of the National Gas Policy and setting up of the Nigerian Gas Flare Commercialisation Program (NGFCP).

“The NGFCP is designed as the strategy to implement the policy objectives of the government for the elimination of gas flares from Nigeria’s oil and gas fields in the near term (two to three years), with potentially enormous multiplier and development outcomes for Nigeria.

“It is also designed as the contribution of the petroleum sector to Nigeria’s Intended Nationally Determined Contributions under the Paris Agreement (COP21).

“It is a unique and historic opportunity to attract major investment in economically viable gas flare capture projects whilst permanently addressing a 60-year environmental problem in Nigeria.”

Speaking on efforts to boost domestic gas supply, the group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Malam Mele Kyari, said that the Corporation had laid down plans to boost domestic gas consumption in the country.

He said that its upstream subsidiary, Nigeria Petroleum Development Company (NPDC), had set out program that would help it to be major supplier of gas in the country.

He added that taking the FID on the NLNG Train 7 project and the Ajaokuta-Kaduna-Kano Gas Pipeline (AKK) projects were part of efforts to ensure the deepening of the country’s domestic gas supply.

“President Muhammadu Buhari inaugurated the 40-inch x 614 kilometers (km) gas pipeline project in June with 24 months’ timeline of project delivery target.

“The AKK Gas Pipeline is a pipeline planned to transport natural gas from Ajaokuta, in Kogi State to Kano, in Kano State, through several states and urban centers, as part of the Trans-Nigeria Gas Pipeline.

“Upon completion, the project will enable the injection of 2.2 billion standard cubic feet per day (bscf/d) of gas into the domestic market and facilitate additional power generation capacity of 3,600 megawatts (MW),’’ Kyari said.

He further noted that the AKK project, which is at 15 per cent completion, would be delivered at the projected time frame.

“That means expanding gas supply into the hinterland and also making gas ready. We are happy that this project is going on and we will deliver it on course and on schedule.

“We have all the assurances of government and particularly, that this government is focused on delivering this project so that we clear the transnational gas pipeline which has eluded us.

Also, Kyari noted that the commissioning of the Integrated Gas Handling Facility (IGHF) Oredo, Edo State, would also go a long way in helping to achieve government’s desire of deepening domestic gas supply.

“The Oredo Integrated Gas Handling Facility and its associated Natural Gas Liquids (NGL) depot will be delivering 240,000 metric tons of commercial grade liquefied petroleum gas and propane.

“It will also deliver about 205 million standard cubic feet per day of lean gas to the domestic market,’’ he said.

Confirming the assertion of the NNPC chief executive, the Managing Director of Nigerian Petroleum Development Company (NPDC), Mr. Mansur Sambo, said the company was the largest supplier of domestic gas in the country.

“Out of about 1.7 billion cubic feet (BCF) that goes to domestic market, NPDC, with its partners supply about 1.1billion and out of this 1.1 billion, NPDC equity is about 620 million standard cubic feet (MSCF). So, as at today, NPDC is the largest gas supplier to the domestic market,” he said.

He stated that NPDC had laid out plans to ensure that the facility was maintained over the years for economic growth and development.

In addition, Minister of State for Petroleum Resources, Timipre Sylva, noted that the Oredo IGHF plant, coming at the close of the year, tells a lot on government’s determination to deliver on its promises in the face of challenges posed by the COVID-19 pandemic.

He noted that the accomplishment of the project highlighted the commitment of the NNPC in eliminating gas flare

“Nigeria has made unprecedented strides in the area of gas infrastructure development that will facilitate exploitation and monetization Nigeria’s massive gas resources for national development.

“Beyond the swath of social amenities and employment opportunities, the project will offer broad vistas for business development among the host communities,” Sylva said.

Sylva further noted that government had through its Auto Gas policy inaugurated Compressed Natural Gas (CNG) plants in some selected petrol stations across the country to help reduce the impact of the hike in the price of petrol on motorists.

He said that conversion centers have been established with the provision of over one million conversion kits to the centers.

He said the introduction of gas for the powering of automobile and other engines was a step in the right direction, adding that it remained a cheaper and cleaner source of energy.

“It is very important to note that this shift to gas underscores Mr. President’s seriousness and determination in the development of Nigeria’s vast gas resources.

“This initiative is envisaged to create two million jobs per annum, promote skills acquisition and enhance technology transfer in addition to growing the nation’s Gross Domestic Product (GDP),” he said.

But experts have urged the federal government to ensure sustainability of these projects as it targets SME growth.

Specifically, an energy expert, Mr. Joseph Nwakwue, said that the declaration by the Minister was a step in the right direction,

“The Honorable Minister of State for Petroleum Resources, Chief Timipre Sylva has declared 2020 as the year of Gas for the Nation. As I have said ever so often, more than an oil nation, Nigeria is a gas nation,’’ he said.

He added that natural gas has the enormous potential to diversify and grow the Nigerian economy, power its industries and homes, produce ever-so-lacking wealth, create jobs, develop associated industries in the petrochemical sector, raise people out of poverty, among others.

“Sylva’s demonstrated intent could perhaps become the most relevant political action anyone has taken in Nigeria in years and could change the country forever,’’ he said.

In addition, Mrs. Josephine Edem, an Economist said, “Small business owners are in dire need of power to do their business; they need gas for power to reduce cost of production.

“Deepening the domestic gas supply will help the growth of Micro, Small and Medium Scale Enterprises (MSME), and by extension, bring about growth and development needed in the country. We need gas now.”

It is expected that full implementation of these gas projects would bring about desired results by improving power supply in the country, creating jobs and boosting local production among small and big business owners.

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