A lot of investment opportunities abound in the natural gas sector of the Nigerian petroleum industry. Increasing attention is now being given to this vital sector. Government's aspirations for the gas sector include creating new industries out of the old oil industry; capturing economic value and generating as much revenue from gas as from oil by 2010. Others are developing the domestic gas market and, ending gas flaring by 2008.
Remarkable progress has been recorded towards the realization of these objectives. Of the current annual gas production of about 2,000 Bscf, about 40% is flared. This is a drastic drop from the 70% proportion flared before the advent of this administration. The hitherto flared gas is being channeled into gas powered projects for rapid utilization and monetization with a view to maximizing value addition to the nation's natural gas resource by 2010.
Domestic gas consumption is expanding as a result of the ongoing power sector reforms while gas export which was non-existent prior to 1999, has received a strong boost.
Comprehensive and integrated gas utilization Master plan/programmes have been embarked upon, in which LNG and IPP developments are being given priority. The expected increased export earnings from LNG, coupled with adequate domestic power supply from IPPs, will strongly support and broaden economic expansion and urbanization, increase the income generating capacity of Nigerians and lift the general wellbeing. It will further reinforce Government's efforts towards integrating the Host communities into the mainstream of national development and growth.
Many gas-based projects are being undertaken in line with Governments aspirations in the sector. They include:
Domestic Gas Market ExpansionAs a result of various projects established, total gas utilized in the country increased from about 197 million scf/d in 1999 to about 573 mmscf/d in 2004. Substantial demand growth is expected in this decade. Consequently, domestic demand for natural gas is expected to increase to about 1700mmscf/d by 2010. Investment opportunities therefore abound in the domestic gas market
Independent Power PlantsGovernment is encouraging JV and PSC multinational oil companies operating in Nigeria to embark on IPPs, as part of the Power Sector reform. The Reform Act reviewed the generation, transmission and distribution of electricity in the country to improve its performance. The IPPs will not only boost electricity supply but also, provide necessary infrastructural support for economic growth, and also guarantee additional revenue to the participating JV/PSC companies. The IPPs will further strengthen the oil companies' social responsibility in the local economy as well as protect the environment through environmentally sustainable operations and industry best practices. The various IPPs are expected to contribute about 3000 MW to the national grid by 2007. This strategy will ensure the realization of Government's intention to increase the national electricity generation from the current 4,000 MW to about 10,000 MW by 2010 to enhance economic activities.
The Liquefied Natural Gas Projects.Since production started from trains 1& 2 in 1999, NLNG has been one of the fastest growing endeavours in the world. Train 3 was commissioned in November 2002 while 4 and 5 are expected to be on stream soon. When Train 6 is added in 2007, LNG output will total about 22 metric tons per annum.
In addition, the Brass LNG with 2 trains and an output of 10mtpa is expected to be on stream in the first quarter of 2009 while the Olokola (OK) LNG which is a 4 train plant with an output of 20mtpa will have the first 2 trains commissioned in 2009/2010.
The West Africa Gas PipelineThe Final Investment Decision of the West Africa Gas Pipeline was signed on 16th December 2004. The initial capacity utilization of the pipeline which is 200 mmcf/d is expected to increase to about 460 mmcf/d by 2026 This project which is of strategic importance is expected to foster cooperation and economic development in the sub- region in the spirit of the New Partnership for African Development (NEPAD).
The Tran Saharan Gas Pipeline.A Tran Saharan gas pipeline running from Nigeria to Algeria is under consideration. The objective is to make Nigerian piped gas available to Europe. The technical and commercial viability of this project is however being studied through a feasibility study being undertaken by a consultant on behalf of NNPC and Sonatrach.
Gas to Liquids & Natural Gas LiquidsThese include the Escravos Gas- to- Liquids with a capacity of 34,000 barrels per day, the Escravos Natural Gas Liquids 1, 2 & 3 as well as the Mobil Natural Gas Liquids 1& 2.
In totality, on going gas transmission programmes would entail commercialization of about 14,750 mmscf/d of gas by 2011 (80% for LNG). However, about $2.5billion will be required annually in stable investments (upstream and LNG plants) to capture opportunities in gas and power by 2010. The private sector therefore has a critical role to play in the realization of these and other projects.
With these developments in the gas sector as well as the transformation in the upstream, it is believed that energy sector driven initiatives could contribute up to 60% towards doubling of the nation's GDP over the next 10 years.