L-R; Yetunde Taiwo, Ed Ubong, Ashely Taylor, Gbite Adeniji, Gaius Obaseki, Saidu Mohammed, Tony Attah and Yegbide at a Panel Session
At the first Panel Session of the Nigerian Gas Association (NGA) Conference which was held in Abuja, stakeholders and speakers express their views on cogent issues. The Panel Session which was moderated by former Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) and NGA, Gaius Obaseki, addressed a lot of issues.
Fredrick Agbedi, Chairman, House Committee on Gas Resources was represented by Honourable Yegbide. In his contribution, Yegbide made it known that the first challenge on gas is security. He emphasized on the Global Memorandum of Understanding (GMoU) which is being used in the Niger Delta in relation to Agbami field and for the past fifteen years there has been no disruption of production. The initiative is an antidote that will aid security. He said oil has a safe value for vandals but gas does not and it means two things are responsible should there be disruption. It could be either ignorance or anger which can motivate people to vandalize gas pipeline. “If I vandalize a crude line I might get product to sell or cook it and do whatever I want to do with it. That is why a greater part of our environment is getting burnt because vandalizing from oil produces a product for sales.” Gas does not have such value, it cannot be gathered and sold like oil, which means vandals are either ignorant of what they are looking for or angry.
Yegbide posited that when an environment produces a product for power in other parts of the country, and the place is in darkness, the tendency is that the people will react negatively. He advocated that consultation and continuous dialogue is critical for security issues in terms of vandalism. He revealed that some rural dwellers have cell phones but could not recharge them due to lack of power, “These are smaller issues that create bigger problems.” The entire vicinity of the Niger Delta might not have access to power but the people know that there are gas pipelines within their environment that produce electricity elsewhere.
The House of Representative member was of the view that Chevron has not experienced vandalism in its Agbami field for over two decades because of its direct relationship with the environment. Sincere engagement should be in place. Sometimes gas companies are economical with the truth by not divulging facts with regards issues on power.
On gas flare, Yegbedi said the mangrove in the Niger Delta which sustained the environment is being depleted. The depletion affects the environment than gas pollution. The mangrove is used for cooking and other domestic uses. The government needs to provide gas so as to divert attention of people from depletion.
He said there should be a separate gas regulator and it should not be merged with a single regulator because gas is vast than oil. There is need for clear demarcation so that the gas sector will be privately driven to attract investors.
Giving insight from his country’s gas resources, Ashley Taylor, President, Point Lisas Industrial Port Development, revealed that Trinidad and Tobago has one of the oldest oil and gas sectors globally. The country started mining oil as early as the 1800 in Forcados and it is recorded that Trinidad and Tobago has one of the oldest oil wells that has been drilled. The government recognized the huge potentials gas represent in the country as a result of that a decision was taken to harness it for the downstream sector.
Taylor noted that the country’s gas reserve estimate is at 11.5 trillion cubic feet (tcf). Trinidad and Tobago’s made assiduous efforts to ensure that it makes substantial proceeds from gas sales by seeking for investors in the sector. The government embarked on different approaches such as incentives and taxation. This precipitated the government being able to collect more taxes.
The Caribbean country focused on reserve in order to avoid depletion by converting gas into sustainable development. It also diversifies into methanol and ammonium. Taylor disclosed that the Prime Minister of the country is an experienced geologist including those saddled with responsibility to manage the country’s oil industry. This assisted the country to enhance its oil sector with stringent measures put in place to ensure security of gas supply with plan that by 2022 at least 20% of consumption of electricity would come from renewables.
In his contribution, Christopher Beale, General Manager, Commercial and Development of West African Pipeline Company (WAPCO), emphasized on resource diversification that asset should be developed to domain centre in order to share proximity with nearby industries. He advocated that Aje field in Lagos should be developed.
Beale pointed out that payment and reliability issues within West Africa pipelines have been improved but there are still hurdles to be crossed. He urged operators to imbibe in the culture of willing-buyer-willing-seller. This will help the market to solve itself because there will be interference. The downstream should find a way to connect with the upstream. He commended member countries within the region for prompt payment of gas which has supported the sector.
Giving his own perspective under the Oil Producers Trade Section (OPTS), and representing the Chairman and Managing Director of Shell, Osagie Okunbor, Ed Ubong, said it is necessary to get the value chain right, “If we get one million Scoff of gas a day it can power three manufacturing plants.” When three middle plants and industrial users are working, they will keep the economy growing, even if the Nigerian Labour Congress (NLC) threatened to go on strike, gas demand drops by 10% because workers at the shop floor will not turn up for work. This is the impact that gas has for the Nigerian economy right from the grass root.
Ubong spoke about OPTS, that it is working with a lot of its partners. “If they did not invest with NNPC, there will be no volumes, he added.” Members of OPTS have made giant strides in supporting domestic gas market and they are continuously supporting the country’s gas agenda. He added that indigenous players like Seplat and ND Western have changed the landscape doubling the gas production from fuel that were owned by IOCs over 100%.
Nigeria has come a long way but it is yet to find her feet. Funding gives operators concern. For the past two years, the OPTS applied for Power intervention fund about $2 billion to address power debt. The programme will soon expire because there are no funds.
The Shell boss made it known that infrastructure plays a key role in getting gas from the field to where it will be bought. He urged the government to boost the AKK project that will allow gas to move from south to north. Ubong said OPTS lay more emphasis on conducive business environment that will give investors’ confidence to do business in Nigeria and convince other would-be investors.
Security of lives and property is key to the progress of business and the government has to strategize on its citizens’ safety to guarantee investors. In the absence of security, “You begin to ask yourself, if the business is worth running.”
The General Manager, Commercial, ANOH Gas Processing Company Limited, an offshoot of Seplat, Yetunde Taiwo, said NNPC should be given credit for being the driver of development of gas in Nigeria. Taiwo commented on NNPC’s seven critical gas development project which the corporation has embarked upon showing the aspiration of the government being carried out through NNPC.
She projected that by 2020, gas demand will rise to 7.5 billion cubic feet (bcf) per day. Being an upstream player, Taiwo asked “Where will all this gas go?” how is it being sequenced including the usual challenges associated with gas development in the domestic market. Gas development is mainly to develop the economy and if there is a partnership with the private sector, it leads to divergence of expectation. Private sector looks at return on investment, government focus on stimulating the economy with gas so that its aspiration will be realized.
Taiwo said as pricing is being emphasized in gas, there is need for collaboration between the federal government and the private sector. As projects are developed, the country needs to do it in tandem with infrastructure. She counselled that if existing infrastructure is maximized, it will be a stepping stone for any expansion. Thus, “let’s use existing facility to the maximum, let’s optimize it and let’s test the might a bit.”
Giving his own perspective in the panel session, Chief Operating Officer, Gas and Power of NNPC, Saidu Mohammed, said security of supply is paramount. Lack of security has led to vandalism. Mohammed said there is need to dialogue in the same platform in order to avoid disagreement.
While focusing on security of supply, security should be in place for the off takers to take gas on commercial framework. If the frame work is punctured, producers will shut their pipelines. This will lead to the risk of empty pipelines. Thus, security of demand is an issue and part of it is payment.
Initiatives have been taken by government to resolve cash flow issues in the power sector so that stakeholders in the value chain will not be shortchanged.
On gas storage, Mohammed noted that the process will be alternative to vandalism which has not been nipped in the bud for quite some years, “If one pipeline segment has been breached, with a storage, you just put the gas and continue to supply.” Gas will be contracted under contractor obligation.
NNPC intends to make gas storage as a business whereby an operator can store gas to avoid vandalism. The initiative is to think outside the box so as to solve problems and issues surrounding vandalism.
According to Mohammed, gas will be privately driven, the upstream operators will search for the gas, produce it to the surface and allow it to be injected into the network by investors. This model has commenced with Asa north which is one of the critical seven projects of NNPC. He was of the view that funding is an issue and this has been curtailed by looking for private sector to fund the infrastructure. The upstream should be decoupled in order to allow other players to be involved.
Apparently expressing his views from the perspective of government, Special Technical Adviser (STA), to the Minister of State for Petroleum Resources, Adegbite Adeniji, explained that one of the key concerns of the Ministry of Petroleum Resources is the issue of security of supply and energy for Nigeria. There are many networks in the system but they are still limited while energy demand is growing.
Adeniji noted that every country is concerned with robustness of supply sources and delivery systems. Nigeria should focus on options available in terms of supply sources. The policy position is to look at other terrain to see what is possible. Nigeria has discovered huge amount of resources in the offshore, but the issue is contractor framework to unlock gas resources to enable optionality.
According to Adeniji, Nigeria should create options across the country. The strategic importance of AKK project should be appreciated which will be of interest to the northern Nigeria. The significance is to industrialize, avoid deforestation and desertification. The population is growing and cheap access to energy sources is a big solution to the northern part of the country which is a key access of the AKK project. The objective is to ensure that the project is delivered in a manner that gives confidence to the upstream that there is a viable anchor project going forward.
Adeniji emphasized on alternative gas supply to stranded gas markets in the country. Gas supply agreement is utmost because it provides the basis for other mini LNG. To get the gas market going, there is need for options.
Ministry of Petroleum Resources plans to take resources to open a pathway for many entrepreneurs who are looking for gas. Basically, the government wants to create a platform to provide support for investors including the private sector.
The Panel Session was brought to a close with questions and answers while Obaseki advised that solutions proffered should be utilized to address gray areas in the gas sector in Nigeria.