As Nigeria continues to battle an economic recession largely caused by the crash in global crude oil prices, the search for an alternative means of boosting the economy remains an important objective. Nigeria's overdependence on crude oil has caused many other sectors of the economy to suffer. One of such being the gas subsector. The constant neglect by past governments has prevented the development of thriving gas-based industries in Nigeria; such as petrochemical and fertilizer plants. This has remained so for a long while, notwithstanding that Nigeria has the ninth largest gas reserves in the world. Nevertheless, respite seems to be on the way as the Petroleum Industry Road Map recently released by the Federal Government seems to indicate a renewed interest in the development of the Nigerian gas subsector.
A quick review of the road map reveals that going forward, gas will be one of the key areas where the government intends to direct its focus. The objective of the government is to move Nigeria from a predominantly oil-dependent economy to a Gas driven economy that would place Nigeria as a regional hub for gas based industries. The new National Gas Policy to be implemented by the government will create a governance framework (legal, regulatory, institutional, commercial, fiscal) that would address and situate Gas as a 'standalone commodity'. In this regard, policy objectives of the government would include: ensuring the fulfilment of domestic gas obligations by the oil companies; ensuring bankable Gas Supply Agreements(GSAs); and the achievement of Gas-to-Power targets to support the nation's power generation capacity.
The renewed interest in gas is indeed commendable given that Nigeria has the 9th largest gas reserves in the world. This new emphasis on gas investment will provide enormous advantages and opportunities to both government and the private sector. For example, the Liquefied Natural Gas (LNG) exports by the Nigeria LNG Limited (NLNG) alone has been estimated at $85 billion (about N17 trillion) since its inception 15 years ago. Also, given that a large deal of Nigeria's power generation capacity is driven by gas; the commercial viability of gas would enhance the required investments in the critical gas infrastructures which would in turn improve the power capacity of the Generating Companies in the country.
The Nigerian government had for a long time now left the Nigerian Gas market to function on its own without much attention. This has been due to the self-sustaining success of the NLNG project as well as the government's overbearing dependence on crude oil. In 2008, a Gas Masterplan was introduced but its provisions have largely remained unimplemented. However, the Petroleum Industry Road Map has seemed to bring some sort of investment confidence in the gas subsector. It's high time investors seized these great opportunities created by the commercial viability of gas both at the domestic and international levels.
An article by the firm's Energy & Infrastructure Group, editors of Power Today, a weekly e-publication containing updates on happenings in the energy/power sector of Nigeria on a weekly basis.
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