The Nigerian Gas Association (NGA) had its yearly Natural Gas Business Forum in Lagos including its 19th Annual General Meeting. The Forum tagged, Gas Policy, Market & Regulation: Catalysing Development of Gas Industrial Hubs, attracted key stakeholders and members of the revered association also known as the voice of natural gas in Nigeria.
The mind boggling question is, does a distributor have enough money to build infrastructure in an area without producing or selling gas? This is the risk that gas companies confront in Nigeria. There is a significant market making effort that should be enhanced for gas and security cannot be undermined. There is no way millions of dollars will be spent to build gas infrastructures and kidnappers with unscrupulous elements will be demanding for outrageous money after abducting an operator, obviously, the menace has to be prevented. This accounts for apparent disconnect between where gas is produced in the Delta than where the gas industries are situated. Gas industries are mostly in Lagos and Ogun states hence 30% of gas infrastructures lie in the South west, the level of sanctity has improved such that gas factory is secured and taxes are paid to the state governments.
An investor focuses on the value chain on ground which include source of the upstream aspect, midstream capability and the downstream. If the elements in the value chain is not maintained, there will be issues, suppose, there is no capacity to pay for gas there will be no need to unlock gas potentials when other stakeholders within the value chain do not have the capacity or ability to invest. The project will fail. Therefore, to fund gas investment, the government must attract investors and they must be assured about the sanctity of the sector that money invested will be developed. Investors will have confidence to invest. Critical issues in doing business in Nigeria, such as: multiple regulation, lack of sanctity in contract and sundry taxation constituting nuisance to business development must be nipped in the bud. Investment should not be led by government but experts that will drive the business while funding, legislation, security are paramount for a virile gas hub in the country.
Concerned about the present situation of gas in Nigeria, stakeholders expressed their thoughts about gas development in the country.
The General Manager, Commercial, Nigeria Gas Processing and Transportation Company Limited (NGPTCL), a subsidiary of the Nigerian National Petroleum Corporation (NNPC), Justin Ezeala, asserted that the state owned company is primarily focused on transportation of existing gas infrastructure and processing it as well with its sister company that market gas and makes efforts to take it to the final consumers which is part of its developmental obligation. Ezeala said it has been discovered that those close to source of gas infrastructure do not benefit from it, but the government is addressing the issue.
On security of gas pipelines, he made it known that even though efforts are being made to prevent vandalization by the Nigerian Gas Marketing Company (NGMC), it is not easy either to protect gas facilities since people have intruded the Right of Way. The company is working with International Oil Companies (IOCs) to empower host communities to secure pipelines. Ezeala disclosed that “There is collaboration with the IOCs to protect the pipelines and in some communities they have been provided with electricity, the generating capacity is changed from diesel to gas, if the pipelines are attacked power goes off because the power generating facilities have been changed to gas.” Most generating power has been changed to gas so that the community can share in the pain whenever gas infrastructure is vandalized.
The General Manager was of the view that despite the uncertainty and harsh environment, NGMC has continued to work behind the scene to put its head above water, “to expand gas business, the hub must be identified.” He was optimistic that the Minister of State for Petroleum Resources, Ibe Kachikwu through his private driven initiative will address issues bothering the gas sector.
Expressing his views with regards to gas business in Nigeria, the Managing Director of Niger Delta Petroleum Resources (NDPR), Dr. Layi Fatona opined that the ease of doing business in the country and formalization of the process is cumbersome due to regulatory issues. On sustenance and maintenance of gas infrastructure in Nigeria, he said, there must be infrastructure before maintenance. Fatona added that any investor who invest in gas infrastructure since it an expensive venture will definitely provide a space for protection, “just as it is in the oil business today, onus will be on the owner of the asset to ensure that they are protected.”
Processes for doing business has to be done with ease while access to fund for investors should be easy as well. Nigeria needs to work on its cultural shift to attract needed capital into the country for investors to thrive.
Wole Ogunsanya, a member of NGA counselled the association to be involved in legislative process of gas in Nigeria. He made it known that the Content Act that was signed in into law in 2010, the Petroleum Technology Association of Nigeria (PETAN), an umbrella body for oil service operators was at the beginning of the Local Content policy and worked with legislators to in order to have a virile law, NGA has to take a cue from this initiative. The association has to lobby, contribute and draft laws that will uphold the gas sector. NGA must be in forefront as did PETAN for Local Content Policy.
Commissioner for Gas Resources in Cross River State, Chris Ujah, explained about stabilizing development of gas industrial hub, the state government is building a lot of industries tagged “Ayade Corridor”. Cross River State government is working with NGMC to build gas hub at Export Processing Zone (EPZ) which is in dire need of gas for ease of doing business in the state. Ujah enjoined NGA to take the advantage and ensure that the state has flurry of gas to boost industrial activities. “I want NGA to move to Calabar and see what is happening there, Cross River State is a gas zone, we have the Yalla Gas Reserve and the Calabar Gas Reserve. That is true, for those of you who know the state, you will find out that there are lots of gas deposits in the state even though it has been taken away from 76 oil wells,” Ujah exclaimed. The Commissioner posited that the state is thinking out of the box to develop its gas industry.
Emphasizing on gas hub in the country, Stephen Ogunlabi, recalled that Vice President Yemi Oshibajo said the federal government is planning to build a gas industrial Park at Ogidiben in Delta state but unfortunately, the status of the project is not known. It is unclear if the project is either abandoned or suspended.
Former Group Executive Director, Gas and Power of NNPC, David Ige spoke on his experience about gas in Nigeria. Ige observed that the issues in the sector is continuity, “our biggest challenge is continuity and if there is no continuity we will not make progress.” The former GED expected that the project done for gas in the country despite change of administration would have been allowed to continue. Gas policies are consistent in the world to create efficient market. The country would have consolidated on existing policy but unfortunately, it missed that opportunity, and “for almost two years we were still writing policy.” According to Ige, if Nigeria had imbibed in policy implementation, some of the projects that were 99% completion across the country would have been completed and finished. It is a matter of doing the right thing. Ige noted that the problem of the Electricity Distribution Companies (DisCos) shortly after they took over was liquidity of supply and an effective gas implementation would have addressed some issues in distribution and generation of power.
Responding to Ogidiben Gas Park, Ige revealed that the vision of Ogidiben was clear, it was to be a gas hub for industrialization to take care of aluminum, steel, petrol chemical, fertilizer and methanol by creating supply mechanism. Ogidiben was designed as a gas based industrial park and it attracted a lot of interests.
One of the challenges it had was ethnic rivalry between two major tribes in the Delta State, “it caused a major disaster for us which was not anticipated at that time and it was just based on name either it should be called Ogidiben or something else.” The second challenge was unnecessary rivalry between the Nigerian Port Authority and NEMSA. It frustrated the process making it difficult for NNPC because they disagreed on trivial issues. The project could not move forward coupled with gas supply while the IOCs could not commit the expected supply into the park.
Ige stated further that “If we do not create a viable liquid gas market, everything else will not sell.” What the country needs is just one step at a time. A cluster should be created for the power sector and drive it from source to the end. If gas will be delivered from power to the end, it is easier to tell consumers that method will be changed. The country should go back to the drawing board and recognize that it is one step after the other with continuity and not competition in spite of administrative change.
In his remarks, the Chairman of NGA, Engineer Dada Thomas, reiterated that there should be a Petroleum Industry Bill (PIB) with virile fiscal bill that will grow Nigeria’s economy and not “shrink it.” He advocated for a willing buyer and a willing seller and government should not be involved in business but in regulation while the private sector should drive the process of business. NGA will continue its process of promoting gas business in Nigeria and it will continue to engage stakeholders. Its two major objectives are advocacy which has to do with getting right policies and promoting investment in gas business in Nigeria, “we have been engaging and we will continue to engage.” Dada said, NGA is the natural voice of gas in Nigeria and enjoins the incoming executive to consolidate the association’s primary position of being the only voice.