Nigeria’s stride in Natural Gas development
By Salisu Na’inna Dambatta
There is the popular saying by knowledgeable experts in the oil and gas industry that, Nigeria is more of a gas-endowed nation than a crude petroleum one.
The recent discovery of one trillion cubic feet (TCF), of gas and 60 million barrels of associated condensate by Eni of Italy through its Agip Oil Company of Nigeria, is a very important proof of that point. It is an addition to the often quoted 187 trillion standard cubic feet of gas (tscf) in the country.
Reports on the discovery quoted the company, which is in a joint venture with the Nigerian National Petroleum Corporation (NNPC), saying “The well can deliver more than 100 million standard cubic feet/day of gas and 3,000 barrels/day of associated condensates, and will be immediately put on-stream to increase (Nigerian Agip Oil Company) NAOC’s gas production.”
The Company added that the discovery had further potential that would be assessed with the next appraisal campaign, adding: “The Obiafu-41 Deep well has reached a total depth of 4.374 metres encountering an important gas and condensate accumulation within the deltaic sequence of Oligocene age comprising more than 130 metres of high-quality. ”
Various sources indicate that Nigeria is one of the top ten nations in the world with huge natural gas reserves, which is estimated at over 187 trillion standard cubic feet (tscf).
The current production of gas by Nigeria is estimated at 8.24 billion standard cubic feet of gas per day. It is both for domestic consumption and export.
For the domestic market, Nigerian Liquified Natural Gas (NLNG) Ltd says at the moment, it has “signed Sales and Purchase Agreements (SPAs) with 15 off-takers (all Nigerian companies) in which the company is committed to deliver up to 250,000 tonnes of LPG into the Nigerian market annually, in line with the commitment to grow the domestic LPG market in Nigeria.”
The LPG Domestic Supply Scheme, which has been an outstanding success, has led to a signiﬁcant reduction in the end-user price of LPG through out the country. This has driven growth in domestic demand for the cimmifuty. For example demand for and utilization of LPG rose from 40,000 metric tonnes in January 2018 to 78,000 metric tonnes in July 2019.
As for export, the country has a long term purchase agreements with customers in Europe, although, although some cargoes are sold and delivered to clients in parts of Asia.
The recent signature of intent for the construction of the 7th Train for the Nigeria Liquefied Natural Gas in the value of $7 billion is a testimony that implementing the National Gas Master Plan is on course. So is the gas pipeline that will deliver gas to proposed thermal power plants in major centers of economic activities in the country including Abuja, Kaduna and Kano.
Another plus for the gas sub-sector was announced by the Group Managing Director, Nigerian National Petroleum Corporation, Mallam Mele Kyari, who said that the corporation has got a $2.5bn financing from a Chinese lender for a gas pipeline project.
He said in an interview with a Television station that it is a pipeline contractor project that would deliver 3, 600 megawatts of power and supply two billion standard cubic feet of gas.
Indeed, the Gas Master Plan is a huge project designed to harness and commercialise more of the country’s gas endowment. And it is getting strong impetus under the watch of President Muhammadu Buhari, who doubles as the country’s Minister of Petroleum Resources.
The importance of the 7th Train to the economy can be appreciated more by its designed production capacity, which will boost Nigeria’s current Liquifified Natural Gas production by 30 per cent.
“The NLNG T7 expansion project aims to increase NLNG production capacity from 22 million metric tonnes per annum (MPTA) to over 30 MTPA” reports indicate.
The implications and benefits of producing more Liquefied Natural Gas and Natural Gas Liquids for the country are legion and mult-idimensional. The Nigerian Content Development and Monitoring Board estimates that the construction project will create more than 40,000 jobs for fabricators, haulage firms, iron and metal traders and suppliers, food vendors and engineers.
By boosting commercial production of liquefied natural gas and reducing gas flaring, the Nigerian treasury will have additional cash inflow from dividends, taxes and gas sales as well as less-polluted environment.
On the income side from gas sales for the country, it can be appreciated more clearly by reminding Nigerians that the NLNG Limited paid a whopping $17.407 billion in dividends to the Federal Government for its 49 per cent stake in the 15 years to 2014.
The dividend earned from 2015 to date with Muhammadu Buhari as President is $3.102 billion, a significant contribution to the government coffers, which was invariably deployed for national development.
For its massive financial contributions to the national economy, improving the environment by reducing pollution caused by gas flaring, creating jobs for thousands of people and giving Nigeria a good image and name as a reliable partner in the supply of liquified natural gas to customers, all Nigerians should celebrate the successes achieved and efforts being made by the NLNG to harness Nigeria’s gas endowment for the benefit of the people. .
By Salisu Na’inna Dambatta a Public Affairs Analyst wrote in from Kano