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Minister of Petroleum, Ibe Kachikwu

The Need to Develop Value Chains In Natural Gas Industry

By John Meze:

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NNPC GMD, Maikanti Baru

Although blessed with vast natural gas resources, Nigeria has become more famous for her production of crude oil owing largely to the higher earnings derivable from the sale of oil.  For so many years however, the country has been slow in the   development of the gas  sub-sector, which experts believe   has capacity to further  boost the nation’s foreign exchange earnings.

 The lesser attention accorded the gas sector, according to experts, has led to the emergence of only one natural gas gathering firm and stunted development of the value chains in the industry. This situation has robbed the country of the opportunity to create more jobs for the teeming population.

Industry experts  are of the view that the nation’s lukewarm attitude towards the gas  industry may not be uncon-nected with the lesser margin of profits when compared to those of crude oil in the international market.

 Opportunities in the midstream of the gas value chain, include Investment in gas processing facilities, mini Liquefied Natural Gas (LNG), floating LNG, Gas storage facilities, EPC of over 2000km gas pipelines, EPC of gas processing facilities, EPC of gas metering and monitoring system and Fabrication of pipes.

The gas value chain may be the next destination of the nation’s economy  given the steady paradigm shift to  more environmental friendly sources of energy or alternative sources which are known to be cheaper, more manageable and less hazardous to life and the environment.

Speaking recently about the achievements recorded  by the gas industry in the country, Chief Operating Officer of NNPC’s Gas and Power Autonomous Business Unit and Chairman of  the Nigerian Gas Processing and Transporta-tion Company Limited (NGPTC), Engineer Saidu A. Mohammed, informed that the total revenue generated from gas sold and transmitted during 2016 amounted to N219.5 billion as against N155.5 billion in 2015,  representing a  41 per cent increase over the previous year. This is even as the price of the product has dropped from $4 per standard cubic feet to about $3.

The Chief Operating Officer explained that the increase was due to revenue generated from application of higher transportation tariff and new commercial customers that came on stream.“An overview of NGPTC’s business per-formance for the year 2016 shows that 307 billion standard cubic feet (bscf) of gas was sold and transmitted as against the planned 463 bscf, thereby achieving 66.4 per cent of its target. The year 2016 also reveals a performance of 4 per cent below the volume of 319.25 bscf sold in 2015,” he stated.

He noted that the Company was confronted with the challenges of incessant vandalism of the Escravos-Lagos Pipe-line System 1 (ELPS 1), Trans Forcados pipeline and evacuation bottleneck of condensate in 2016.

This is a record that the industry is getting more recognition and patronage than before and may as well in no distant future be the nation’s major foreign exchange earner, given the down turn of crude oil prices and its poor appreciation worldwide.

It was therefore heartwarming that  the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr Maikanti Kacalla Baru, recently  stated that the Federal Government has mandated the Corporation to pursue an aggressive gas development programme to stimulate economic growth in the Country.

Baru, who made this disclosure in Lagos during a Gas Roundtable meeting for Chief Executives and Directors of the oil and gas companies organized by the Nigerian Gas Association (NGA) where he was named the Pioneer Advisory Board Chairman of the NGA, said the mandate was to ensure that gas Infrastructure development is enhanced for gas supply while stressing that this was a critical focus areas in the Federal Government’s 2016-2019 “Big Wins” for the Oil and Gas Industry as well as in the NNPC’s 12 Key Business Focus Areas to grow the industry.

“With the vast Oil and Gas experience entrenched in this Advisory Board and with the passion, I, as the Pioneer Chairman of the NGA Advisory Board have for gas development, I hereby re-dedicate myself to the aggressive de-velopment of the Nigerian Gas Sector and commit myself and all members of the NGA Advisory Board to do every-thing possible to achieve the objectives of the Board which align perfectly with NNPC’s key business focus area,” Dr. Baru affirmed.

He noted that opportunities at the upstream gas development included the acquisition and operatorship of oil blocks, drilling rig leasing, provision of engineering services, heavy equipment leasing, seismic acquisition and processing, Engineering, Procurement, and Construction (EPC) contracting, Fabrication of pressure vessel, running steel mills and provision of banking/financing services, etc.

 According to him, downstream value chain offered opportunities for investment in LPG bottling and marketing, In-vestment in gas based industries (Fertilizer, Methanol, Petrochemicals, CNG stations and conversion workshop), EPC of fertilizer and petrochemical plants, manufacturing of LPG cylinders/accessories.

The NNPC boss added that the Nigerian Gas sector remained the largest and most vibrant in Sub-Saharan Africa with lots of potentials, especially in the deep water and untapped gas resources.

He said  the  ongoing gas  reforms were anchored on a robust strategic framework that is focused on maximum eco-nomic impact through gas, saying that it aimed to drive linkages with agriculture, manufacturing and dispersed small enterprises through Power.

Earlier, the President of NGA, Mr. Dada Thomas, stated that for the Nigerian economy to achieve its full potential there must be power anchored on gas development through active private sector participation.

 How much of this that would be done remains to be seen, especially now that the nation talks about diversification, a drive that seeks to pull national interest more to other areas than oil and gas.

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