Co-location Strategy A New Concept That Can Unlock Nigeria’s Gas Potentials

Major stakeholders in Nigeria’s oil and gas sector have converged to press on government to adopt the co-location strategy to unlock huge potentials in the country’s gas sector.

The co-location initiative is an outcome of extensive Gas Based Industrialization, GBI,  study conducted by Facility for Oil Sector Transformation, FOSTER, a non profit organisation given the gap, or absence, of critical and mature midstream infrastructure (among others), to support the GBI. 

Oriental News Nigeria reports that the co-location concept is a practice, which promotes optimization through one or more plants sharing mature pre-existing infrastructure, rather than building their own infrastructure, or waiting for a third party to do so. 

At media training to sensitize the public on the initiative, experts in the oil and gas industry believed that the strategy could encourage and promote increased GBI investments by the private sector; create a vibrant value chain, provide employment and substantially increase governments revenue and the potential for reducing host community conflict in Niger Delta. 

In his address, Louis Brown Ogbeifun of the African Initiative For Transparency, Accountability And Responsible Leadership, AfriTAL, noted that since this is a new concept to the oil and gas space, it is crucial for the media to understand the concept of colocation strategy for the implementation of Gas based industrialization projects in Nigeria. 

Ogbeifun, said the engagement has become necessary since the Civil Societies have been in the forefront of impressing on successive Governments, to embark on radical changes that would transform the oil and gas industry into a world-class energy sector.

He said advocacy campaigns have in part, led to many attempts aimed at reviewing Nigeria’s oil and gas laws that would attract investors, allow the sector to run unencumbered and improve its bankability. 

He recalled that 19 years after the Petroleum Industry Bill, which started its journey as the Oil And Gas Implementation Committee (OGIC) in April 2000, it is yet to be passed into law. 

“In June and July 2017, the Federal Executive Council approved the National Gas Policy and the National Petroleum Policy (NPP) respectively. Laudable as theses were, they are yet to be progressed to the realm of law.

 In 2018, the National Assembly also passed the PIGB into law. Unfortunately, the Bill is yet to be signed into law. 

In addition, the fiscal, Host Community and the Administrative Bills are still within the confines of the National Assembly. As this administration winds down, there is nothing in the horizon to show that these bills shall see the light of day.”

Ogbeifun, stated that in spite of the alluring reputation of Nigeria as the second largest producer of liquefied petroleum gas, LPG, in Africa, progressing her per capita usage of LPG has been stalled by failures traceable to systemic corruption, lack of political will to reviewing and implementing policies, rent-seeking, entrenching the culture of promoting conflict entrepreneurs, which leads to non-bankability of oil and gas investments and projects; and painful abandonment of projects, neglectful under-development of the market and the oil producing environments.  

Nigeria, he said,  is a blessed nation with abundant and enormous gas resources that is capable of generating massive employment that would ease the pressure of unemployment on our teeming youths, but sadly the country has not fully harnessed the opportunities presented by the value chain of all the products available within the oil and gas streams.

” Though the Nigerian Liquefied Natural Gas (NLNG) has done well in its quest to earning scarce foreign exchange for Nigeria and launching the country into the international markets, it has been unable to satisfy Nigerias domestic demands. For instance, Nigerian LPG production was estimated at 2 million metric tons per annum (MTPA) in 2016. 

But her annual per capita consumption of 2.3kg remains lower than the West African regional average of 3.5kg and the Sub-Saharan African average of 2.5kg. Paradoxically, Nigeria is presently exporting her crude and importing finished products for use in Nigeria, over 90 per cent  of her domestically produced Liquefied Petroleum Gas is exported and in return, we massively import of the LPG for local consumption.”

Speaking further he added that “Just like the petroleum subsidy regimes become big profitable venture for rent seeking and highly connected Nigerians, the LPG business is also encumbered by avoidable bureaucratic distortions, under-utilization of the LPG, lack of effective planning for the use of the LPG, lack of political will and effective strategy to formulate and implement a reversal of the current export driven LPG strategy to one of increased domestic utilization, corrupt practices, a defective LPG penetration strategy, lack of enabling infrastructure, lack of effective regulatory mechanisms; the persistence of giving priority to Premium Motor Spirit,  PMS over Gas as a value based energy product, lack of critical and mature midstream infrastructure needed to achieve near-term gas based implementation strategy in Nigeria.

He said that given the gap, or near absence of critical and mature midstream infrastructures among others to support gas-based industrialization (GBI) project in Nigeria, trying to address some of the gaps identified above, the Facility for Oil Sector Transformation (FOSTER) conducted two studies and recommended co-location as an infrastructural optimization strategy that could be explored. 

He lauded the strategy as being capable of encourage and promote increased GBI investments by the private sector; create a vibrant value chain, provide employment, substantially increase governments revenue and the potential for reducing host community conflict in Niger Delta. 

“If the country must effectively implement the principles of co-location, the press has to play a major role in the dissemination of the advantages and workability to the populace. They can only play this critical role if they fully understand the concept and how it could help Nigeria achieve her optimum in gas based implementation. This therefore, is one of the reasons you have been invited for the training and dialogue. 

On the flip side is the worrisome phenomenon of contestations, dysfunctions, skirmishes, stalling or total abandonment of developmental projects intended for the Niger Delta, which hitherto was ascribed to agitations for resource control; injustices perpetrated by authorities, unemployment, environmental degradation. he said.

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