SAN FRANCISCO, October 31, (THEWILL) – The Nigerian National Petroleum Corporation (NNPC) has revealed that about $51 billion investment opportunities exist today in the midstream and downstream gas sector to achieve the growth phase in the Industry in Nigeria.
This was disclosed by the Group Managing Director of the NNPC, Dr. Maikanti Baru, while delivering a key note address at the Nigerian Gas Association (NGA) 10th International Conference and Exhibition in Abuja.
Speaking while delivering a paper titled ‘New Growth Phase for Gas Business in Nigeria, Baru posited that about $35.4 billion investment will be required in the gas exploration and production activities, power plants projects, fertilizer plants, virtual pipelines and flare gas commercialization initiatives.
The GMD added that $16 billion investment will also be needed in the Free Trade Zones (FTZ) infrastructure development and concessioning, port infrastructure, central gas processing facilities, gas transmission, LPG plants, real estate development, pipe milling and local fabrication yards among others.
He stated that some of the key enablers that will be required for the growth of the gas sector include clear definition of boundaries between upstream, midstream and downstream sectors, appropriate pricing structure and guarantees for payment, host communities engagement and conducive environment for investors.
“Beyond growing gas for power sector, there has been a strategic positioning of the sector to support massive gas based industrialization,” he said.
“The intent is to position Nigeria as a regional hub for gas based industries such as fertilizer, methanol, petrochemicals, central processing facilities, etc. The first of this effort is the planned 30 square kilometer gas based industrial park in Delta State. This will be Africa’s largest purpose built gas park supporting gas based industries.”
According to him, to bridge the huge gas supply gap, some strategic synergy opportunities for gas development were identified amongst the Joint Ventures (JVs), Production Sharing Contracts (PSCs) and independent operators which when pursued and implemented will not only bridge the unforeseen long term shortfall in gas supply but will also enable the nation to meet its gas aspiration.
The NNPC helmsman noted that seven key big bang gas development projects have been identified from the strategic synergy opportunities to deliver about 3.4 billion cubic feet of gas per day to bridge the foreseen medium term supply gap by 2020.
Also, Minister of State for Petroleum, Dr Ibe Kachikwu, said the Federal Government would give more attention to the development of gas as a major revenue earner.
“I must say that over the years there has been a blatant neglect of this sector. We really haven’t focused on gas; all had been on oil production,” he said.
“With regard to the recession today, it is clear to us that if we develop a two window of economic earnings, a lot of emphasis will move to gas.
“We are going to be introducing new technical resources, restructuring existing departments and assigning new managers to the existing departments. These reforms are clearly articulated in the proposed national gas policy.
“The new fiscal policy we are working on will make gas a stand-alone, separate from oil and not consolidated on oil taxation.
“Our intention is to retain the current pricing framework for a limited period. It will end when sufficient gas volumes are built up to a level that will underpin a competitive gas market.
“Under such condition, wholesale gas price will be market-led.
“Government is determined to see flare out in the earliest shortest time. We are seeking to exit gas flaring by 2020, 10 years before the 2030 deadline the UN gave.
“To achieve this, a number of measures will be introduced; gas utilisation will be a priority consideration over every other consideration for handling of associated gas.
“We will be increasing the gas flaring penalties to an appropriate level sufficient to de-incentivise the practice of gas flaring.
“Our focus really will not be on penalisation; we will seek quite frankly to simply stop it and not you throwing money at us.”
Story by Oputah David
