Dr. Maikanti Baru, GMD, NNPC
It was a busy moment for stakeholders in the gas sector at the Nigerian Gas Association (NGA) biannual conference and exhibition in Abuja. The NGA conference was the 11th edition tagged “Shift to Gas Economy: Pace & Scale of Innovation in the West African Sub-region.”
Speaking to participants at the gas conference in his keynote address, Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC) noted that NGA has come a long way since its formation in 1999.
Dr. Baru said, “We have since grown to have in our fold the entire gamut of the who-is-who in the Nigerian gas industry including gas producers, gas transporters, service providers, students, members of the academia and government. Year-in, Year-out, the turnover recorded for this event has been quite impressive.”
Baru expressed optimism that the topic’s keynote address “Gas as a catalyst for sustainable Nation building” did not come as a surprise bearing in mind that Nigeria is more of a gas province with some oil in it when converted including the country’s 202Tcf of gas reserves with upside potential of up to 600Tcf and 6 to 17 Trillion barrels of oil equivalent compared to crude oil and condensate reserves of 37Billion barrels.
He said the keynote topic is germane after evaluating the potentials of gas in economic growth, influence and prosperity of countries that have effectively used the resources. Example of such countries are; Russia, Qatar and Trinidad & Tobago among others. In Nigeria, gas unlike oil has significant impact on the GDP. Gas creates linkages with other sectors of the economy such as agriculture, industry and power. Gas penetration is key to enhancing industrial growth of the transit towns and villages. Baru explained that classical example in Nigeria is the Escravos to Lagos gas Pipeline System (ELPS). This gas pipeline is responsible for the proliferation of power plants, gas based industries, cement companies and fertilizer plants. It means that expansion of gas pipeline can influence economic growth and serve as a “Catalyst for Nation building.”
Baru submitted that the Federal Government has embarked on aggressive investments to link the entire country through gas pipeline infrastructure to improve power generation, promote gas-based industries such as fertilizer, urea, methanol and other possibilities.
He made it known that the topic is in consonance with objectives of the current administration’s Economic Growth Recovery Plan (ERGP) which in part aims to accelerate non-oil revenues, improve transportation infrastructure, drive industrialisation, stabilise macroeconomic environment, achieve agriculture and food security by ensuring energy sufficiency. The country can achieve a greater percentage of these objectives and improve Gross Domestic Product (GDP) growth through the effective utilisation of gas resources.
Baru opined that in the last eight years, NNPC has completed and commissioned over 500 km of gas pipelines which are now delivering gas to power plants and industries. Some of the completed pipelines include the Oben-Geregu (196 km), Escravos-Warri-Oben (110 km), Emuren-Itoki (50 km), Itoki-Olorunshogo (31 km), Imo River-Alaoji (24 km) and Ukanafun-Calabar pipeline (128 km).
The corporation is not resting on its oars as it is currently completing the construction of strategic 48inches by 130km Obiafu-Obrikom-Oben (OB3) East-West Interconnection pipeline which will deliver 2Bscfd of gas.
The GMD commended the administration of President Mohammadu Buhari, Members of the Federal Executive Council and Minister of State for Petroleum Resources, Dr. Ibe Kachikwu and other stakeholders for their support to NNPC in its quest to reposition and revitalize Nigeria’s economy using the country’s enormous gas resources. The Federal Executive Council at its sitting approved another key gas project – the 40 inches by 614km Ajaokuta-Kaduna-Kano (AKK) gas pipeline using the novel Contractor financing model. The AKK pipeline at completion will deliver gas to the planned Abuja, Kaduna and Kano Power Plants which would generate additional 3,600MW to the national grid.
The GMD emphasised on “Seven Critical Gas Development Projects (7CGDP)”. These projects are an integral leg of the gas development strategy designed to leverage the full potential of gas to meet the target of generating at least 15 gigawatts (GW) of electricity by 2020. The Seven Critical Gas Development Projects include – the 4.3 trillion cubic feet (Tcf) Assa North/Ohaji South field; the 6.4 Tcf Unitized Gas fields (Samabri-Biseni, Akri-Oguta, Ubie-Oshi and Afuo-Ogbainbri), the 7 Tcf NPDC’s OML 26, 30 and 42, the 2.2 Tcf Shell Petroleum Development Company (SPDC) JV Gas Supply to Brass Fertilizer Company, the cluster development of 5Tcf in OML 13 to support the expansion of Frontier E & P Uquo Gas Plant; and the cluster development of 10 Tcf Okpokunou/Tuomo West in OMLs 35 and 62).
According to Baru, these massive investments point to a key role of diversifying the Nigerian economy from an oil-based economy to a gas-driven economy. The multiplier effect of the evolution of gas-based industries to galvanise industrialisation and develop small and medium scale enterprises among others. Nigeria has an unprecedented demand for gas which far outweighs the global average growth rate. This growth is mostly fueled by demand from the Power sector following massive investment in power plants and relocation of gas based industries into Nigeria.
The GMD pointed out that due to problems in the power sector, particularly transmission and distribution, the industry is forced to shut in over 500MMscfd of gas meant for the power sector that would have generated about 2,000MW of electricity. The corporation is not only investing in gas for power generation and gas-based industries but NNPC has also successfully completed a pilot programme to introduce natural gas as fuel for transportation through Compressed Natural Gas (CNG). Currently, there are over 4,000 cars, mostly commercial taxis, run on natural gas in Benin City, Edo-State, served by a network of six gas filling stations. This is cleaner and cheaper than Premium Motor Spirit (PMS) as the taxi drivers save significantly on petrol cost by using CNG.
However, NNPC, due to importance of Liquefied Petroleum Gas (LPG) also called cooking gas has made massive investments in the promotion of usage of cooking gas. The corporation has revamped eight LPG Butanization plants in some parts of the country. It will also connect all the stations through pipelines to bring LPG closer to consumers.
Dr. Baru made reference to industrial park for the Western Franchise Area which is planned to be developed at Ogidigben near Escravos in Delta State. This industrial park, when fully developed, will be home to many plants. Part of it is the Central Processing Facilities (CPF) of 2 Bscfd, petrochemical plant of about 1.3MTPA polyethylene and 400,000TPA polypropylene.
It will also boost fertilizer plant of 2 x 1.3MTPA ammonia and 1.3MTPA urea plant when fully completed. There are opportunities for port facilities and power plants. Other plants includes: methanol plant, telecommunication facilities, water treatment facilities and utility facilities.
Similarly, NNPC is supporting the proposed Brass Fertiliser and Petrochemical project with a design for production of 1.75 Million Tons Per Annum (MTPA) of Methanol, 2.5MTPA of Urea and 400,000MTPA of Poly-Ethylene.
On the aspect of investment, Baru revealed that the Federal Government’s investment in Nigeria Liquefied Natural Gas (NLNG) Company Limited has yielded appreciable returns running into billions of Dollars annually in the form of dividends, taxes, fees, levies, remittances and other forms of payments to the Nation. In July 2018, the Dual Front-End Engineering Design (FEED) contract for the NLNG Train 7 were awarded. This will pave way for the bidding process of the Engineering, Procurement and Construction (EPC) which are pre-conditions for the Final Investment Decision (FID). With the oncoming of Train 7, NLNG’s annual LNG production will increase from 22 MTPA to 30 MTPA.
The NNPC helmsman highlighted some key challenges in the gas sector. The country is faced with challenge of pipeline vandalism which has led to shut-in of some wells. “For some wells, they will never come back on-stream while for others, additional investments will be required to bring them back to production, Baru added.”
There are issues around power transmission and evacuation. Non-evacuation of power has led to back pressure on the transmission lines which has also resulted in shut-in of producer wells. Thus, it is a cyclical challenge. This challenge will definitely dovetail into discussions around National Grid upgrade, Grid decentralisation, Off-grid power, Captive power among a host of alternatives.
The GMD mentioned the challenge of funding critical gas infrastructure. This led to adoption of the Contractor-financing model for the AKK pipeline.
According to Baru “Our march towards using gas to diversify our economy and increase non-oil revenues is a step towards the right direction. I have no doubt in my mind that it is indeed a catalyst for sustainable Nation building.”