Boosting Nigeria's gas sector

May 25, 2009 02:00 AM

The recent disclosure that Nigeria is on track to becoming the world's second fastest growing LNG supplier after Qatar is quite encouraging.
Dr Emmanuel Egbogah, special adviser to the President on Petroleum Matters who disclosed this at the 2009 Oloibiri Lecture of the Society of Petroleum Engineers on "Nigerian Gas in the New Economic Landscape" said the Nigerian LNG project had expanded to six trains since the first train came into operation in 1999, adding that the seventh train was awaiting final investment decision. Other gas gathering projects in Brass, Olokola and other third party LNG projects are also awaiting final investment decision, he said.

According to Egbogah, Brass and Olokola LNG facilities when completed will add over 30 mm tons of additional LNG capacity for export apart from the current installed capacity of 22 mm tons of LNG per annum. On the regional front, he said that Nigeria is well positioned and ready to supply gas to the West African sub-region. The completion of the West African Gas Pipeline project (WAGP), which was conceived with the objective of delivering Nigerian gas to the West African sub-region, is nonetheless another positive development that would aid the ambition of Nigeria to become the second largest LNG supplier in the world.
Given the importance of the LNG project, especially its potential to validate Nigeria's economic leadership position in Africa, the Federal Government must give the venture the attention it deserves. The Federal Government must endeavour to handle the LNG project with all seriousness because of the huge addition which revenue from the project can contribute to the national economy.

This is why the simmering Halliburton bribery scandal which must have contributed to the unfortunate delay in the take-off of the venture should be speedily resolved while those found guilty of any misdemeanour in the scandal should be appropriately sanctioned. It is intolerable that the attitude of top Nigerian government officials involved inthe LNG bribery scandal involving the engineering subsidiary of Halliburton; Kellogg Brown & Root (KBR) of the United States has negatively affected the realisation of the project.
It will be recalled that KBR had admitted in a US court that it offered a $ 180 mm bribe to yet to be identified Nigerian government officials to influence the award of various LNG contracts to the firm. In this regard, the Okiro panel put in place in April by the Presidency to investigate the bribery scandal should not spare any effort in unearthing Nigerian collaborators in the cheerless scandal.

Investment in the LNG project is particularly strategic for Nigeria as it will also provide an opportunity for the diversification of the export base of the Nigerian economy. At the regional level, the project will facilitate the integration of the economies of the sub-region in line with the objectives of the New Economic Partnership for African Development (NEPAD) and the African Union (AU).
Considering that the rising priceof gas in advanced economies is resulting in a relocation of gas-based industries to low gas priced regions such as Nigeria, the implication is that Nigeria will most likely experience an increasing influx of investors in fertiliser, methanol and gas-to-liquid plants. The Federal Government must implement policies that will enable the country to exploit this advantage. Apart from the expected influx of foreign investments, other possible drivers for the growth of the LNG project include industrial consumers from the manufacturing sector which is expanding its capacities and increasing demand significantly.

The ongoing reform in the power sector which is largely dependent on the successful implementation of the Gas Master Plan is another reason why the Federal Government should pursue the project to its logical conclusion. The LNG project remains a crucial driver in the growth of the power sector. Currently, the power sector consumes about 500 mm cfpd. Experts forecast that the power sector will grow its demand for gas to well over three bn cfpd by the end of 2010.
It is imperative that the Nigeria LNG able to provide the full capacity to supply the required gas consumption. It is for this all important reason that the on-going activities of militants in the Niger-Delta should be decisively resolved. A peaceful Niger-Delta region will provide a desirable environment for the production of the LNG and other related investments.

To sustain the envisaged growth in the gas industry, The Federal Government should encourage the training of Nigerians to acquire technical and specialised skills needed to work in the various stages of gas production. This would lead to lesser dependence on expatriates who possess the requisite skills needed in the oil and gas industry.
To harness the proven gas reserves of 187 tcf or the estimated gas reserves of 600 tcf will require skilled manpower. It would benefit the country more if enough Nigerians can be empowered to operate in the industry. Apart from saving the country valuable foreign exchange, developing a critical mass of competent Nigerians in the sector will aid the growth of technology in the country.

The National Assembly also has a role to play especially in the area of legislation against gas flaring.
Even though the legislators have given December 30, 2010 as deadline to multinational oil companies to end gas flaring in Nigeria efforts should be concentrated on ensuring compliance so that the practice of constantly shifting the post would end.

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