By Ikenna Omeje and Jerome Onoja
As part of the Federal Government’s gas revolution agenda, President Muhammadu Buhari, in March, launched the “The Decade of Gas” programme, which aims to make Nigeria a gas powered economy by 2030.
Gas is seen as the energy of the future and Nigeria has over 200 Trillion Cubic Feet (TCF) of gas reserves and over 600TCF of unproven gas reserves, which if properly harnessed will keep the country relevant in the energy space as the world transits from fossil fuels to green and cleaner energy.
Buhari noted that the current global trend in favour of green and cleaner energy presents the country with an opportunity, adding that Nigeria is a gas nation.
He said, “Nigeria is gas nation, rich in oil. But the country has focused on oil over the years. This is a paradox that we have decided to confront by declaring the Decade of Gas.
“The rising global demand for cleaner energy sources has offered Nigeria an opportunity to exploit gas resources for the good of the country. We intend to seize this opportunity,’’ he said.
“Global developments have indeed presented Nigeria an opportunity. Gas will become the dominant fuel for generating power, especially in Africa and Asia. The question now is ‘’Can we rise up to the challenge?”
In his speech, the President also said that
gas development and utilisation should be a priority to stimulate growth, drive investments and provide jobs for Nigerians.
Gas will continue to remain relevant as the world pushes towards energy transition. But for Nigeria to
take advantage of the opportunities of rising demand for cleaner energy sources, which include gas, the country must tackle issues around gas flare, poor infrastructure, political climate and formulate enabling laws and policies to drive investments in the gas space.
Speaking with Majorwaves, Mr Emeka Ene the vice chairman at the Council of the International Gas Union (IGU) and chief executive officer of Oildata Energy Group said that the announcement of the Decade of Gas is not enough. But noted that policy statement creates alignment with the private sector.
He said, “Announcement alone doesn’t solve the problem. Policy statement creates alignment, and sustaining that process is going to create the relevant handshake with the private sector. And one of the relevant handshake is of course, the Nigerian Gas Flare Commercialization Programme, which is an experiment itself, but the idea is to have private sector invest in flaring out, rather than rely on operators to do it on their own.”
He also noted that for the country to achieve industrialization through the Decade of Gas, there must be a deliberate plan to do so, adding that countries like Malaysia, Singapore, and South Korea, who hitherto were referred to as third world countries, did not come this far through wishful thinking.
“Nigeria cannot be successful through wishful thinking.
So if we’re going to succeed, it’s having clear, razor-sharp vision of what we want to see our industries and economy be 10 years from now,” he said.
According to him, the clear vision may be to increase Liquefied Petroleum Gas (LPG) to certain level from now to the next 10 years, noting that the aspiration of the country is bigger than an individual. He added that policies like the Decade of Gas requires that all stakeholders work together towards achieving the set target.
Gas flare extermination commitment history
Despite huge gas deposits, Nigeria’s economy largely depends on oil. According to some experts, this is because of the failures of successive governments in the country to focus and explore other natural resources, which the country possesses. This, unfortunately, has led to loss of revenues that could have been generated from gas, and other natural resources.
According to Aderonke Adejugbe and Bayo Onamade in an article, ‘Nigeria: Gas Flaring In Nigeria: Challenges & Investment Opportunities’ stated, “ It is however worthy to note that whilst statistics may not be accurate,
the quantity of gas flared in Nigeria exceeds over 40 percent of the gas flared annually across Africa, which amounts to about $7billion in waste.
Apart from economic waste being a consequence of gas flaring, flared gas is also known to contain toxic substances which cause respiratory diseases
and air pollution, leading to depletion of the ozone layer, ultimately having an adverse effect on weather and climate.”
In 1979, the country came up with its first regulatory framework aimed at promoting anti-gas flaring policies, known as the Associated Gas Reinjection Act, 1979. Under the Act, oil and gas producing companies in the country were required to submit to the minister for petroleum, detailed programmes in relation to the re-injection of produced associated gas or programmes for the use of produced associated gas.
The Act also provided for the deadline for gas flaring in the country as stipulated by the Federal Government to be 31 December 1974.
Till date, this deadline is yet to be met despite several extensions through a succession of bills and amendments of laws.
In recent years, the Federal Government had initiated a number of actions to reaffirm its commitment to ending the practice of gas flaring in the country’s oil fields. As part of its commitment, the government ratified the Paris Climate Change Agreement, and is a signatory to the Global Gas Flaring Partnership (GGFR) principles for global flare-out by 2030.
It also committed to zero flare of gas by year 2020, which unfortunately, did not come to realization.
The continuous flaring of gas in the country may not be unconnected with lack of political will on the part of successive government in the past; unavailability of the infrastructure required to control gas flaring; unavailability of market for domestic gas products; and the low price of gas in the country.
The launched NGFCP struggles
The former Minister of State for Petroleum Resources, Dr. Ibe Kachukwu, on December 13, 2016, launched the Nigerian Gas Flare Commercialisation Programme (NGFCP), following an approval by the Federal Executive Council. This was in recognition that flared gas could be harnessed to stimulate economic growth, drive investments and provide jobs in oil producing communities and indeed for Nigerians through the utilization of widely available innovative technologies.
“The NGFCP is designed as the strategy to implement the policy objectives of the FGN for the elimination of gas flares with potentially enormous multiplier and development outcomes for Nigeria. The objective of the NGFCP is to eliminate gas flaring through technically and commercially sustainable gas utilization projects developed by competent third party investors who will be invited to participate in a competitive and transparent bid process. The commercialisation approach has been considered from legal, technical, economic, commercial and developmental standpoints.
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,”
NGFCP stated on its website.
“The NGFCP will offer flare gas for sale by the Federal Government of Nigeria through a transparent and competitive bidding process. A structure has been devised to provide project bankability for the Flare Gas Buyers, which is essential to the success of the Programme.”
Subsequently, Kachikwu in April 2019, inaugurated the Ministerial Steering Committee of the NGFCP to evaluate the bid for the 178 flared sites that have been identified in the country. This was after over 800 companies expressed their interest to manage the identified 178 gas flared sites. Each of the bidding companies was to make a compulsory payment of $1,000 fees to back their bids.
The Ministerial Steering Committee was to recommend the best governance structure prior to the Department of Petroleum Resources (DPR) carrying on with the programme as a statutory function immediately after the first auction rounds.
However, nothing was done until after 10 months. The Director of DPR, Engr Sarki Auwalu, disclosed at NGFCP bidders’ conference in February 2020, that 200 companies had been shortlisted, following the evaluation of statements of qualification. He subsequently declared that 45 gas flare sites would be put up for auction in the first phase of the programme.
In June 2020, the Department announced that the NGFCP is being delayed by six weeks due to COVID-19 related travel restrictions, thus limiting the involved stakeholder’s ability to access to flare points. The first phase of the programme was expected to resume once travel restrictions eased.
“In response to the prolonged lockdown due to Covid-19 Pandemic and the attendant consequences on daily business operations and commercial activities across Nigeria, the Department of Petroleum Resources has extended the NGFCP Bid Submission Due Date by a period of 1 month. Accordingly, all Qualified Applicants are hereby notified that the NGFCP Bid Submission Due Date has been extended to June 4, 2020,” a statement dated June 4, 2020, signed by Dr Musa M. Zagi, on behalf of the Director of Petroleum Resources, read partly.
Attributing the delay of the scheme to the recent oilfields marginal bid round, the Minister of State for Petroleum Resources, Chief Timipre Sylva, late May, said that with the licensing round off the table, the government would focus on the NGFCP and see to its completion before the end of June 2021.
He assured that the Federal Government will award licences under the NGFCP to qualified bidders as part of efforts to meet zero gas flare target in the country and expand its gas footprint.
Early in May, the World Bank listed Russia, Iraq, Iran, the United States, Algeria, Venezuela and Nigeria, as the top seven gas flaring countries in the last nine years.
Similarly, the Bretton Woods institution said the seven countries produce 40 per cent of the world’s oil each year but account for nearly two-thirds, representing 65 per cent of global gas flaring.
In 2019, about 320 billion Cubic Feet of Gas (BCF) was flared, while the
Federal Government and local operators lost approximately 90.9 billion cubic feet of natural gas due to gas flaring in the period from January to May 2020. Authorities put the estimation of the financial loss at close to $230 million
during the five months.
Nigeria is a signatory to the Paris Climate Change Agreement, and on paper adheres to the Global Gas Flaring Partnership (GGFR) principles for global flare-out by 2030. But this shaky start is already casting a shadow over the realisation of the 2030 target. The delay being witnessed in the bidding process of the NGFCP, appears to be more of a bureaucratic issue than unforeseen circumstances.
Impact of the Pandemic
Following the outbreak of Covid-19 pandemic, the global economy was brought to its knees in the second quarter of 2020, as a result of lockdowns and restrictions put in place by countries, to stem the tide of the virus. This led to dip in oil and gas prices, with West Texas Intermediate (WTI) trading negative for the first time, to close at -$37 per barrel on April 20, 2020.
In January 2021, the Microsoft co-founder, Mr. Bill Gates, announced through his blog an article entitled “These advances will make 2021 better than 2020 “, that the world was not out of the wood, regarding Covid-19.
He warned that the issue of Covid-19 will continue to be on the political agenda around the world, whose subject people will continue to hear very often. Although the arrival of vaccines has provided some succour, Gates warned that the mass production and distribution of vaccines will be a great challenge for countries.
“Unfortunately, there are still not many factories where you can build mRNA products. Some must also be stored at temperatures as low as -70 ° C, which makes them particularly difficult to distribute in developing countries , although this is more of an engineering challenge than a scientific barrier, ” he said.
He, however, gave encouraging message, saying, “Human beings have never advanced more in any disease in a year than with Covid-19 and, in that sense, the philanthropist considers that 2021 will be a year full of hope .”
“Still there are two main reasons to be hopeful . One is that masks , social distancing and other interventions can slow the spread of the virus and save lives while vaccines are being implemented , ”he further stated.
Similarly, during an interview on Derek Muller’s YouTube channel Veritasium, Gates pointed out climate change and bioterrorism
as prominent threats facing the modern world.
“Every year that [climate change] would be a death toll even greater than we’ve had in this pandemic,” Gates said during the interview.
related to pandemics is something people don’t like to talk about much, which is bioterrorism, that somebody who wants to cause damage could engineer a virus.
So that means the chance of running into this is more than just the naturally caused epidemics like the current one,” he said.
Also, the Director of the United States Institute of Allergy and Infectious Diseases (NIAID), and Chief Medical Advisor to the President, Dr Anthony Fauci, predicted in February that normalcy will return hopefully in 2022.
ABC News reports that Fauci in an interview with Times Today, said,
“Hopefully, by the time we start entering 2022, we really will have a degree of normality
that will approximate the kind of normality we’ve been used to.”
Since the outbreak of Covid-19, Federal Government has taken various measures to keep the oil and gas industry running. In March 2020, the DPR directed oil and gas firms to reduce the workforce on offshore platforms.
“All travels to and from offshore/remote locations shall strictly be in line with the guidełines and procedure for travel to offshore/swamp location and obtainment of offshore safety Permit 2019,” the Department said in a circular.
It noted that only staff on essential duties should be nominated and permitted to travel to offshore/remote locations.
“Non-essential staff current(y at offshore/remote locations should be withdrawn with immediate effect.
“Staff rotation less than 28 days/28 days is hereby temporarily suspended. This implies that staff are required to stay a minimum of 28 days at these locations per rotation,” the Department further stated, adding that “Representation by government agencies at offshore/remote locations shall be limited to a maximum of one person per rotation.
“You are to ensure strict compliance with the above while we continue to monitor the situation and provide updates as required.”
Nigeria in April 2020, together with other members of the Organisation of Petroleum Exporting Countries (OPEC), agreed to a historic production cut of 9.7 million barrels per day. Although, this has been reviewed downward, the country’s current quota hovers around 1.5 mb/d.
To discourage gas flaring and increase government revenue, the Director-General, Budget Office of the Federation, Ben Akabueze, in August 2020,said the government would “tighten implementation of the 2018 revised gas flare penalty payment regime (resulting in upward revision of gas flare penalty for 2020 from N44.7bn to N103.51bn)”.
According to the revised payment regime for gas flaring, oil firms producing 10,000 barrels of oil or more per day will pay $2 per 1,000 standard cubic feet of gas, compared to N10 per 1,000 scf in the past.
Firms producing less than 10,000 barrels of oil per day will pay a gas flare penalty of $0.5 per 1,000 scf. But the effect of this new policy is yet to be felt.
The rising insecurity in Nigeria, and agitations by separatists group like the Indigenous People of Biafra (IPOB) and pro-Yoruba nation group, as well as kidnapping and act of terrorism being carried out by bandits and members of the Islamic State of West African Province (ISWAP), call for concerns, especially from investors’ perspectives.
The southeast and some states in the south-south region of the country, over the last 3 months, have become danger zones for security operatives. Several security personnel have been killed, with various police formations and units attacked by unknown gunmen.
To address the current challenges facing the country, and boost investors’ confidence to invest in the country, the former governor of Anambra State, Mr Peter Obi, is suggesting restructuring of the country as a panacea.
Speaking on ”Restructuring, Security Challenges and Development” at the fourth Adada public lecture organised by the association of Nsukka professors (ANP) at the University of Nigeria, Nsukka (UNN) on Tuesday, May 25, 2021, Obi said it is unfortunate that governors depend on oil revenue but through restructuring, governors will look inwards to make their states productive.
According to him, with restructuring, state, local and community police will be set up to tackle criminality within their areas.
“It is unfortunate that some governors believe in going to Abuja monthly to get federal allocation from proceeds of oil,” the News Agency of Nigeria (NAN) quoted him as saying.
“They have forgotten the price of oil in the international market has depreciated and will continue to depreciate.
“No developed country in the world depends on crude oil but they invest in their children, agriculture and encourage small and medium enterprises by giving out soft loans and other incentives.
“There is urgent need to restructure the country for the economy to grow to desired level.”
He said Nigerians who do not believe in restructuring should stop misleading others by claiming it is a deliberate plan to divide the country.
“Rather, it should be seen as a move to build the ailing economy and restore adequate security in the country,” he said.
Meanwhile, the CEO of Royal Dutch Shell, Mr Ben van Beurden, in May at the company’s annual general meeting, hinted the company’s plan to exit from its onshore oil and gas operations in the country.
“When law and order breaks down, when sabotage and theft is rife where you try to operate, no amount of effort that we put in can actually try to compensate for that,”
Argusmedia quoted him as saying.
“At some point in time we also have to conclude that this is an exposure that does not fit with our risk appetite anymore. We have drawn that conclusion, and we are now talking to the Nigerian government on the way forward”.
Even though the Federal Government wants Shell to continue to operate its onshore assets, it seems the company has made up its mind to focus on offshore exploration and production. The Minister of State for Petroleum Resources, Chief Sylva, confirmed in May that the country is in talks with Shell over its planned divestment of all onshore assets.
“Nigeria, in its talks with Shell included options of handing over Shell’s stakes in the assets to the Nigerian Petroleum Development Co. (Company), the upstream arm of state oil firm Nigerian National Petroleum Co., or NNPC, inviting bids from Nigerian indigenous producers, or having a mixture of local firms and foreign independent producers to bid for the assets,” Sylva told journalists in Abuja.
If the views of opinion leaders in the country are anything to go by, the country needs to go for restructuring as an option, to avoid a situation where oil and gas companies begin to declare force majeure, thereby making the targets of The Decade of Gas unrealizable.
Total withdrew all Mozambique LNG project personnel, and declared a force majeure in April, because of rising insecurity in the north of the Cabo Delgado province
of the country.
“Considering the evolution of the security situation in the north of the Cabo Delgado province in Mozambique, Total confirms the withdrawal of all Mozambique LNG project personnel from the Afungi site. This situation leads Total, as operator of Mozambique LNG project, to declare force majeure.
“Total expresses its solidarity with the government and people of Mozambique and wishes that the actions carried out by the government of Mozambique and its regional and international partners will enable the restoration of security and stability in Cabo Delgado province in a sustained manner,” Total said in a statement.
In December 2017, the Federal Government published the National Gas Policy and the National Petroleum Policy in the official gazette. The National Gas Policy commits to ending gas flaring, creating an enabling environment for investors, seeking value addition for gas, and improving governance in the sector.
The programme information memorandum of the NGFCP, states, “The Federal Government of Nigeria will work to grant open access to all pipelines and other essential midstream infrastructure. With respect to pricing of gas for the domestic market, which is largely controlled by the Federal Government of Nigeria under a transitional pricing framework, the current framework will be retained for a limited period until a sufficient gas market is established. The policy objective is to move to market-led wholesale gas pricing without gas price regulation, except where there are natural monopolies. Earlier in 2015, the Ministry of Petroleum Resources announced ‘7 Big Wins’, 7 which outline short- and medium-term priorities to grow Nigeria’s oil and gas industry from 2015 to 2019. The third pillar is a gas revolution, which includes reduction of gas flaring as one of the six goals.”
The National Gas Policy is a fantastic piece of policy document, which aims at setting goals and implementing an institutional framework for the gas sector. The document insists on encouraging the use of Liquefied Petroleum Gas (LPG) as a way to combat climate change, reduce deforestation and improve community health.
As interesting as the content of the document appears to be, the country needs a market-led wholesale gas pricing model without regulation. This would transform the content of the document to reality and by extension, achieve the objectives of The Decade of Gas.
There is need to back the Policy with enabling law. This is why the proposed Petroleum Industry Bill (Bill (PIB), currently before the National Assembly, needs to be passed into law as quickly as possible. It will drive investments in the country’s oil and gas industry.
Speaking in this regard in an interview with journalists in February 2020, the former President of the Nigerian Gas Association (NGA), Mrs Audrey Joe-Ezigbo, said, ”Let me first say that
the decisive action by the Nigerian Government to approve the National Gas Policy was certainly a significant move in the right direction,
establishing the recognition of the Gas Industry as a stand-alone Industry with viable economic benefits to Nigeria. Its primary aim is to advance the diversification drive initiated by the government to move the Nigerian economy from being oil export based to a gas-based industrialized one. It is important to note that although the policy was approved by the government, it is yet to be given necessary legal backing.
“We must progress it to the level of regulation backed by law, thereby deepening its stamp on the Nigerian gas sphere. This aside, I consider it to be a well thought out and articulated document. It may not contain every provision that would have been needed in order to establish Nigeria as a gas-based industrialization, but it undeniably constitutes a great starting point. Do I see the NGP being able to harness the potential of Gas as a tool for national economic development? Certainly!
The policy provides for the separation of key aspects of the value chain -infrastructure ownership, operations and trading in order to dissuade monopolistic business operations along the gas value chain.”
According to her, “The primary dilemma of the gas pricing conversation has been that on one hand, you have the government’s intent on ensuring lower gas prices in order to ensure affordability of the end product to the final consumer, including power; and on the other hand, investors’ need to ensure gas prices that are reflective of the spectrum of their infrastructure cost profiles and other variables that impact on the viability of their investments. The
intention of government is a laudable one but in practice, this is difficult to sustain, especially if we want to see any tangible results in the short to medium terms.
We have such a humongous and rather daunting dearth of infrastructure.”
President Muhammadu Buhari in June last year, flagged off the construction of the Ajaokuta-Kaduna-Kano gas pipeline. The 614 km long gas pipeline, represents phase one of the 1,300km-long Trans-Nigerian Gas Pipeline (TNGP) project, which is being developed as part of Nigeria’s Gas Master Plan (now National Gas Policy) to utilise the country’s surplus gas resources for power generation as well as for consumption by domestic customers. The TNGP project also forms part of the proposed 4,401km-long Trans-Saharan Gas Pipeline (TSGP) to export natural gas to customers in Europe.
The AKK pipeline is being developed on a build-own-operate-transfer (BOOT) basis under public private partnership (PPP) to be supervised by Nigeria’s Infrastructure Concession Regulatory Commission (ICRC).
Other parts of TNGP projects includes the Escravos Lagos Pipeline System (ELPS) 2, and the Obiafu-Obrikom-Oben (OB3) gas pipeline.
“Today marks an important chapter in the history of our great nation. It marks the day when our domestic natural gas pipeline networks from Obiafu in Rivers State, Escravos in Delta State and Lekki in Lagos State, are being connected through Kaduna to Kano states thereby further enhancing national energy security,” a statement by the Nigerian National Petroleum Corporation (NNPC) quoted Buhari as saying while flagging off the $2.6 billion gas pipeline project that will further enhance the country’s energy security.
The President further stated, “We promised the nation that we will expand the key critical gas infrastructure in the country to promote the use of gas in the domestic market.
“These include the Escravos to Lagos Pipeline System – 2 (ELPS-2), Obiafu – Obrikom – Oben (OB3) pipeline and the AKK. I therefore directed NNPC to ensure that these critical projects are completed on time, within budget and specification.”
Speaking early this year at the Atlantic Council Global Energy Forum, 2021 on the topic “Delivering Energy Access in the Developing World,” the Group Managing Director of NNPC, Mallam Mele Kyari, had said that
there is at least $10 billion worth of investments currently ongoing in the energy sector, especially in the area of gas, in the country.
“We are not a petroleum country in the real sense. It’s agreed that we have the 10th largest reserve of oil and a significant gas reserves. Of course, what everybody recognises is the oil. The reality today is that we have a country in excess of 200 million people. Seventy per cent of this population is well below 30, with a growing middle class and one of the fastest-growing economies in Africa.
“More importantly, for us today, an energy deficient country, over 60 per cent of our country is not electrified, the poverty level is very high, extremely challenging. But so much is going on to see how we can reverse this trend. When you combine all these, you will see that as a country of focus today, many things are happening in the energy sector.
“For instance, we are seeing investment in our energy infrastructure, especially in the area of gas in excess of $10 billion; this is ongoing. There are a number of gas-based projects about $3 billion to $5 billion dollars and some of them are at the Final Investment Decision (FID) stage,” he said.
Gas infrastructure is capital intensive, and the current dip in the country’s revenue will make it difficult for Federal Government to solely put in place the necessary infrastructure needed to drive gas development in the country. According to data recently obtained from the DMO by Punch, as of December 31, 2020, the country’s debt portfolio had risen to N32.92tn, with N10.26tn spent on debt servicing between 2015 and 2020. This is why PPP model as currently being used in the construction of AKK, is needed in the area of providing regasification equipment for LNG, and other infrastructure in the gas sector.
Also, the Federal Government and its partners need to begin to think of increasing the Nigeria Liquefied Natural Gas (NLNG) Trains capacity to probably 100 Million Tonnes Per Annum.
Speaking on a panel session on the strategic relevance of The Decade of Gas to the economy, at the virtual Nigeria International Petroleum Summit (NIPS) 2021 Pre-Summit Conference and official launch of the Decade of Gas, the Managing Director of NLNG, Engr. Tony Attah, said, “Train 7 is no longer ambitious. The way to enable Train 7, 8, 9 & 10 is to actually do a lot in the upstream by accelerating development of gas and moving Nigeria from 9th to 4th position in the ranks of gas producing countries.
“We were excited about the move to increase LNG capacity only to hear what Qatar wants to do.
Qatar wants to add 30MTPA as incremental capacity. Our total existence after Train 7 is 30MTPA. That was when we started to feel small.
“Look at Australia with about 150TCF, they have 88MTPA of LNG capacity. Qatar was 2 years ahead of us in developing LNG. Qatar is now 77MTPA capacity. We made a move with Train 7 and set to move from 22MTPA to 30MTPA.”
The DPR revoked four oil mining licences of Addax Petroleum in April, citing the inability of the company to develop the assets.
It, however, took the intervention of President Buhari, who doubles as the Minister of Petroleum Resources, for the licences to be restored to Addax.
“President Muhammadu Buhari has approved the restoration of the leases on OMLs 123, 124, 126, and 137 to the Nigeria National Petroleum Corporation, NNPC which is in production sharing contract with Addax Petroleum, a company wholly owned by Government of the People’s Republic of China on the blocks. The leases belonging to the Federation were revoked on March 30, 2021.
“This development reaffirms the commitment of President Buhari to the rule of law and sanctity of contracts.
“While directing the Department of Petroleum Resources, DPR to retract the letter of revocation of the leases, the President also directed NNPC to utilize contractual provisions to resolve issues in line with the extant provisions of the Production Sharing Contract arrangement between NNPC and Addax.
“The restoration of the blocks to NNPC will boost the organisation’s portfolio, thereby making the Corporation to, in the long run, boost its crude oil production and in turn increase the revenue it generates to the Federation Account,” a statement issued by the Senior Special Assistant to the President on Media & Publicity, Garba Shehu, on April 23, 2021, read partly.
Similarly, the Department on April 6, 2021, also issued letters revoking 11 Marginal Oil Fields licences.
According to the operators of the assets in a letter to Buhari, they have invested over $400 million in these assets.
“The revocation of the licenses will certainly lead to litigation against the Marginal Field Operators by foreign partners and banks who have financed the development of the Marginal Fields, in addition to sending the wrong signal to both foreign and local investors” the operators stated.
“We have conservatively invested over US$ 400 million in developing the affected fields, with a number of them in production, whilst others are in various advanced stages of development including testing of oil wells, drilling of new wells, construction of production facilities, etc.
“These investments were made despite low crude oil prices, militancy, and insecurity in the Niger Delta region, resulting in frequent shut down/ vandalism of crude export pipelines,” they added.
There is a question when it comes to sanctity of agreement in the country’s oil and gas industry. There have been cases where the country has been sued either locally or abroad, on issues around breach of contract agreement.
The case of Process and Industrial Development (P&ID), which was awarded $6.6 billion in damages against Nigeria in January 2017, by an independent London tribunal, is a case that is still fresh in the memory of Nigerians.
Every investor wants to invest in an environment where sanctity of agreement is held in high esteem. This is what the government needs to work on in order to send the right message to investing potentials so as to achieve its gas targets within the next decade.
Despite the current challenges, the Decade of Gas presents huge opportunity for Nigeria to industrialise.
It will create additional sources of revenue for the Federal Government,
which could in turn provide valuable support for renewables and generate millions of skilled, green jobs for Nigeria’s young and fast-growing population.
Speaking at a virtual event organised by the Association of Local Distributors of Gas (ALDG), tagged “The Decade of Gas: “Unlocking Opportunities in the Domestic Gas Market,” the Chief Operating Officer, Gas and Power, NNPC, Yusuf Usman, said that
the country’s oil and gas industry will require at least $40 billion in direct investments in basic infrastructure to achieve the objectives of the Decade of Gas.
“Going forward into 10 years, we expect to do another big pipeline that will take up gas from south, all the way into Ajaokuta and possibly we extend it all the way to Maiduguri,” he said.
The NNPC expects to grow about 10 gas-based industries as it works towards the 10-year target. All these require huge investments, which the government cannot handle alone.
However, the establishment of the Nigeria Oil and Gas Excellence Center (NOGEC), is yielding positive results as the country had so far received at least $20 billion worth of investment proposal from foreign investors, according to the DPR Director, Sarki Auwalu.
“Immediately after the commissioning of the excellence centre (NOGEC), a lot of investment houses across the borders of Nigeria indicated their interest to come into Nigeria
because of the transparency and predictability of the nation.
“As it is now, the excellence centre is to drive value through safety and enhance cost efficiency. This attracted investors and as you can see, we put a lot of emphasis on data because it is an ingredient of decision making and ingredients of investors”.
The Decade of Gas will help in expanding the national power grid. Having about 200 million population, the country needs 200 megawatts of electricity generation. By the NNPC’s projection, demand for gas to generate electricity in the country is expected to consume between 60 to 70 per cent of the entire commodity produced, with the ongoing plan to generate 45,000MW. With these positives, and deliberate commitment to the policy statement to address issues around laws and political climate, Nigeria should be on the path to become an industrialised nation in the next 10 years, through effective implementation of the Decade of Gas policy.