From Uche Usim, Abuja
As the world seeks to wean itself off fossil fuels and its concomitant environmental pollution challenges, energy experts have said gas energy is a cleaner and better alternative to dirty fuels from crude oil.
For a developing economy like Nigeria with rich gas reserves, petroleum industry analysts describe the commodity as one that guarantees economic sustainability, if harnessed.
For decades, tons of gas was flared as Nigeria prospected crude oil. But with the realisation of the loaded benefits of gas, the Federal Government came up with an economic blueprint to turn gas flaring into a money spinning business.
From industry records, the Nigerian Liquified Natural Gas (NLNG), which contributes about 1 per cent to Nigeria’s gross domestic product (GDP), has, over the years, generated $114 billion in revenues, $9 billion in taxes, $18 billion in dividends to the Federal Government and $15 billion in feed gas purchase.
Interestingly, these achievements were accomplished with 100 per cent Nigerian management and 95 per cent Nigerian workforce.
The company is the Federal Government’s arrowhead in the reduction of gas flaring in Nigeria.
More so, the 2019 Nigerian Extractive Industries Transparency Initiative (NEITI) audit report showed that 3,047,507.32mmscf of gas was produced in 2019. This represents an increase of 4.8 per cent compared to the 2,909,143.56mmscf reported in 2018. In addition, $247.794 million was realized from gas sale for the year under review.
Seeing these figures as a pointer to the robust economic impact of gas, President Muhammadu Buhari, in March, launched the “Decade of Gas in Nigeria”, an initiative meant to unlock the full potential of gas utilisation in industrialising Nigeria.
At the launch, he emphasized that the rising global demand for cleaner energy sources has offered Nigeria an opportunity to exploit gas resources for the good of the country.
He stated that his administration would leverage Nigeria’s robust gas resources, currently standing at 600 trillion cubic feet, to urgently industrialize the country and ultimately diversify it away from petroleum, which is gradually being discarded for cleaner energy sources that gas provides. He emphasized that all the opportunities provided by gas would be fully explored under his watch.
The President further told participants at the pre-summit that, while his administration has prioritized gas development and recorded remarkable progress, it is well known that Nigeria is a gas nation with a little oil, but the country has focused on oil over the years.
He said: ‘‘That is the paradox that this administration decided to confront when we declared the year 2020 as “The Year of Gas” in Nigeria.
‘‘It was a bold statement to demonstrate the resolve of this administration that gas development and utilization should be a national priority to stimulate economic growth, further improve Nigeria’s energy mix, drive investments, and provide the much-needed jobs for our citizens in the country.
‘‘Before the declaration of Year 2020 as The Year of Gas, this administration had shown commitment to the development of Nigeria’s vast gas resources and strengthening of the gas value chain by reviewing and gazetting policies and regulations to enhance operations in the sector as encapsulated in the National Gas Policy of 2017.
‘‘Our major objective for the gas sector is to transform Nigeria into an industrialized nation with gas playing a major role and we demonstrated this through enhanced accelerated gas revolution.”
President Buhari also enumerated what his administration has done to energise the sector, noting that the development of gas infrastructure has commenced along with the domestic utilization of Liquified Petroleum Gas (LPG) and Compressed Natural Gas (CNG), as well as the process of commercializing gas flares, development of industrial and transport gas markets, and increasing gas to power.
‘‘We also kick started other policies and projects like the National Gas Expansion Programme, Autogas policy and the construction of the 614km Ajaokuta-Kaduna-Kano gas pipeline.
‘‘After a thorough review of these laudable achievements and successes in the gas space, we acknowledge that Nigeria still has more work to do in the gas space.
‘‘This has led the Federal Government to begin a more proactive push towards gas development. This initiative will ensure further optimal exploitation and utilization of the country’s vast gas resources,” he said.
Extolling the collaboration between the Federal Ministry of Petroleum Resources, Nigerian National Petroleum Corporation and the Nigeria LNG Limited to actualize the dream of transforming Nigeria with its massive gas resources, the President said: “The Ministry of Petroleum Resources and NNPC are in various regards setting the pace.
‘‘I would like to charge all other relevant MDAs on the need to partner with the international oil companies, the indigenous oil companies and financial institutions to actualize the dream of fully utilizing our gas resources to uplift our economy.”
While the Nigerian government highlights the path to gas industrialisation, energy analysts insist that huge investments are required to make this happen.
According to the Secretary-General of the Organization of Petroleum Exporting Countries (OPEC), Mr Mohammad Sanusi Barkindo, projections show that from now till 2045, global investments of more than $12 trillion will be needed in the upstream, midstream and downstream in the gas sector.
He added that tackling emissions has many pathways that should all be explored.
“The oil and gas industries are part of the solution; we possess critical resources and expertise that can help unlock our carbon-free future. It is also important to remind ourselves of the historic plunge in oil and gas
investments in 2020. In the oil sector alone, upstream oil capital expenditure could fall by more than 30 per cent in 2020, a shrill wake-up call, exceeding the annual dramatic declines seen in the severe industry downturn in 2015 and 2016.
“I would like to commend President Buhari for keeping faith with the requirements of continued heavy investments, including critical gas projects, such as the Ajaokuta-Kaduna-Kano natural gas pipeline, the Nigeria LNG Train 7 project and actively promoting several fertilizer blending plants across the country, supporting the ongoing agrarian revolution.
“Nigeria’s ‘Decade of Gas’ initiative also shines a beacon of light on the importance of the Gas Exporting Countries Forum (GECF), and the value of multilateralism. OPEC and the GECF have much in common. We have some of the same member countries, including Nigeria, share similar founding principles, and collaborate together.
“Gas is vital to Nigeria’s future, as is oil. And both will be fuels of choice globally for the foreseeable future and instrumental in facilitating the energy transition.
“What is clear is that no one should be left behind. Sustainable Development Goal number seven of the UN ensures access to affordable, reliable, sustainable and modern energy for all people of the world,” Barkindo stated at a recent petroleum forum.
Nigeria’s Minister of State, Petroleum Resources, Mr Timipre Sylva, recently explained that the main objective of running a gas-powered economy by 2030 springs from the idea of ending gas flaring and turning it into revenue generation.
He noted that investments in gas infrastructure were ongoing like the 614km AKK pipeline project and others.
“NLNG closed the deal on the $10 billion Train 7 project. The AKK 614km costing $2.8 billion is to address the infrastructure deficit in the gas sector. We have shortlisted 200 companies to bid for gas flare sites.
“The Nigerian Gas Expansion Project was also unveiled and all these were to drive investments and boost the economy. We must deal with energy poverty immediately by unleashing our gas resources.
“There will be challenges and President Buhari has the political will to address them as he is ready to use gas as an economic enabler”, Sylva said.
The minister, however, charged stakeholders in the sector to close ranks and work towards gas optimisation as the touted 600TCF of gas remains meaningless, if not harnessed.
“At the heart of this administration is the vision to drive infrastructure and industrial development of the country in order to prosper citizens and make life more meaningful to all. Natural gas ticks all the boxes as the vehicle to help the government achieve the aspiration and that is why we embraced the resource to help turn around the economy.
“To demonstrate that we are indeed committed to our vision, the Decade of Gas has now become an integral part of Nigeria International Petroleum Summit.
“Nigeria’s natural gas reserves stand at 203TCF with potential touted to be 600TCF. So what? Personally, I am tired of reeling out these statistics. They are meaningless without any action.
“From the feedback I got, stakeholders and the Nigerian people are fully in support of the Government’s natural gas agenda and the quest to use the resource to tum this country around. We cannot afford to let the people down. We cannot afford any delay. And we need to hit the iron while it is red hot. I want to believe that the roadmap and action plan to deliver on the expectations of a gas-powered economy by 2030 developed from the earlier meeting is part of the agenda,” he noted.
For the group managing director of the Nigerian National Petroleum Resources (NNPC), Mr. Mele Kyari, the Nigerian gas master plan is gradually and steadily being implemented.
Kyari, at the 2021 Petroleum Summit, noted that the conference was at a good time as the world transits into newer energy, adding that Nigeria should play leading roles in the new world order.
“Fossil fuels are giving way to wind and solar and other types of energy. The Federal Government has committed huge resources to migrate into new energy, especially gas, to grow the economy. Efforts to diversify started in 2016 and 2020 was tagged the year of gas. We’ve rolled out autogas to ensure greater gas utilization is a reality”, he noted.
Already, key players in the private and public sectors, at a recent webinar, demanded urgent delivery of the $2.8 billion Ajaokuta-Kaduna-Kano (AKK) pipeline project as it flaunts all the attributes of industrialization and economic diversification.
Rector, Kaduna Polytechnic, Prof. Idris Bugaje, sounded a note of urgency on the realization of the project and declared that “AKK should be completed quickly in order to pave way for activation of the second phase of the Trans-Nigeria gas pipeline, which would run from Eastern Niger Delta through South-East and Middle Belt to North-East.
Bugaje pointed out that speedy delivery of the project would compensate for its late conceptualization, explaining that the AKK pipeline was coming 25 years late after numerous textile, manufacturing, and agricultural enterprises in the northern parts of the country collapsed under costly, unstable and inefficient industrial fuel.
He also linked the collapse and relocation of industries from northern Nigeria to Lagos with the rising spate of banditry and insurgency in the region. He added that the social crisis in the northern part of the country was a result of worsening business environment and consequent surge in the number of unemployed youths.
He lamented that withering of industries, Boko Haram insurgency and growing banditry could be efficiently addressed by restoring industrial vibrancy in the region which, according to him, hosted the largest textile industries in the past.
He also noted that the military campaigns against insurgency have remained costly and ineffective because of the failure to adopt economic measures in the prevailing counter-insurgency efforts.
Prof. Bugaje, who stressed the role of gas in economic growth and development compared the poverty level and low industrial activity to the economic boom and industrial vibrancy in Lagos State which, according to him, has become the preferred regional investment hub due to abundance of gas flowing through robust distribution infrastructure to industrial clusters.
He listed investment opportunities surrounding the AKK pipeline to include businesses in liquefied petroleum gas (LPG), compressed natural gas (CNG), petrochemical and fertilizer plants, and captive and embedded power production.
He, however, warned against regulations that would limit power producers to the national power transmission grid currently managed by the Transmission Company of Nigeria (TCN), which, according to him, has proved inefficient and commercially unviable.
Also, the managing director of the Nigerian Gas Company, a unit of the NNPC, Mr. Seyi Omotowa, gave assurances that the AKK project would be realized in good time, adding that a presidential inter-agency project management team is working with other stakeholders to overcome all failure factors.
He declared that the AKK pipeline was an NNPC project, while the project loan was hedged against the corporation’s revenue, with the government providing the required sovereign guarantee.
He said the funding model, quality and pedigree of contractors, structures for transparency and accountability, as well as improved security arrangement would enable the AKK project management to overcome all foreseeable challenges and deliver the project in time. Omotowa, who listed the economic values of the pipeline, stated that it was part of the national gas infrastructure blueprint designed to deepen the domestic, regional, continental market for Nigerian gas.
Managing director of Oilserv Limited, lead contractor in the project, Engr. Adegbite Falade, stated that the project could create 5,000 direct jobs during its entire execution time frame, and it would also revive the Nigerian construction industry by involving credible subcontractors across the full project scope. According to him, the project would provide the platform for building the manufacturing sector, grow the GDP, boost power generation by 3,600mw and commercialize gas resources.
to generate revenue for the government.
He reiterated the need for all stakeholders to seize full opportunity presented in the AKK pipeline project, arguing that benefits of the project would erase the incentives for banditry and insurgency through economic revival of the country.
The 614 kilometre AKK pipeline, according to the Publisher of Valuechain Magazine, Malam Musa Bashir Usman, holds immense potential for industrialization of the country, creation of employment for Nigerian youths and reversion of deforestation through displacement of firewood as cooking fuel.
Before now, members of the Organized Private Sector (OPS) of the Nigerian economy, especially the Manufacturers Association of Nigeria (MAN), had consistently called on the government to provide critical factors of production to make investment in the Nigerian business environment attractive, and economically rewarding.
So, the AKK pipeline, when realized, will be a sustainable factor of production that would enhance the local operating environment for business in the country.
The facility will also remain central to all aspects of Nigeria’s industrial development: boosting power generation, stimulating manufacturing activities and de-constraining new field development in the oil industry.
In the upstream sector of the petroleum industry, the AKK pipeline will enable more oil production by helping operators to meet the condition of zero flare development plans. So, operators who have been held down by market limited destinations for associated gas are now provided space in the AKK pipeline.
Again, expanding the domestic gas market with the AKK pipeline will boost investor confidence in the government’s flare gas commercialization programme by providing ready offtake channels for harnessed gas. This strongly propels Nigeria’s drive to attain zero emission at oil production sites and probably enable the country to exit the inglorious global greenhouse emission chart.
Equally, the AKK pipeline promises a double barrel economic advantage for the country by earning direct income for the government and also helping develop indigenous industrial capacity by providing cheaper, cleaner and more sustainable energy. It will become a consistent revenue earner for all stakeholders, including the government by operating a tariff based gas transmission services to assist producers wheel gas to market. It will also entitle the government to tax income, equity dividend and direct market returns on volume gas sales.
Also, the AKK pipeline flaunts all the attributes of industrial stimulus.
Manufacturing capacity in Nigeria today is highly constrained by energy issues. Running manufacturing by liquid fuel is far too expensive and unprofitable; power supply for industrial activity is grossly inadequate. So the AKK pipeline holds potential to feed power plants with adequate fuel energy to generate adequate electricity for homes and businesses. The pipeline can also directly feed industry and commerce with cleaner, cheaper gas energy. In both ways the AKK pipeline is going to enable the industrial sector of the economy to optimize its potential for growth, job creation and contribution to gross domestic product (GDP).
Analysts say the biggest value that the AKK pipeline holds is the testament to the government’s commitment to the Nigerian content policy.