Is gas useful for Nigerians?
by Tessa Doghor
November 7, 2017 | 5:16 pm| | | Start Conversation
Kachikwu, the minister of state for petroleum resources in Nigeria, wants Nigeria to imitate Qatar, another oil producing country.
A gas flare, alternatively known as a flare stack, is a gas combustion device used in industrial plants such as petroleum refineries, chemical plants, natural gas processing plants as well as at oil or gas production sites having oil wells, gas wells, offshore oil and gas rigs and landfills. – Wikipedia
In Nigeria, when crude oil is being sourced, instead of extracting the gas for use in the country, the waste product that comes out as gas is passed out via gas flaring/combustion. In other countries, this gas is extracted and distributed to homes free of charge.
I, and some of the 180 million other Nigerians have been talking about taking advantage of using the gas to power the domestic needs of the home instead of flaring it. The journey to make this a possibility has been long but we are rooting for Emmanuel Kachikwu, the Minister of state for Petroleum.
Nigeria has the largest natural gas reserves, and yet the country has suffered from chronic power outages for decades. Generation after generation of children have grown up to know the phrase “NEPA has taken light” and even the change of name has not changed the modus operandi of the power distribution company. There is no Nigerian who has not grown tired of the antics of the power distribution company.
The irony of an oil producing company with inconsistent power supply is plain as day. The minister of state for petroleum, Kachikwu believes that Nigeria should pay attention to gas.
“We are really a gas nation with some findings of oil,” Mr Kachikwu says. “But we are very late in developing [the gas sector]. “Look at what’s happened with Qatar — imagine if we had gone down that route,”
Qatar has devoted more resources to developing gas than oil and has become the world’s largest exporter of liquefied natural gas.
Nigeria is seeking to capitalise on its 188tn cubic feet of natural gas reserves, which surpass those of Algeria, Egypt and Libya. The more than $50bn-worth of investment opportunities in the business of processing and distribution of gas is something worth noticing.
The push to promote gas production comes at a critical time for Nigeria.
Nigeria needs to monetise its natural resources and better exploit its gas reserves to make the economy more robust, says one Nigerian National Petroleum Corporation official.
It must also reduce spending and dependence on foreign fuel imports that help to power the country.
“Nigeria is experiencing a full-blown energy crisis in spite of its abundant gas resources,” according to a government policy document on the gas sector published last year, which noted that the country lacks critical infrastructure and continues to fall short of domestic supply obligations. Those who can afford it use petrol and diesel generators to provide their electricity.
“Nigeria now needs to work hard to survive in the constrained economic environment the country finds itself in,” the report said.
The document pointed out several challenges hindering gas development. Among them are a lack of focus on where exploration should take place; inadequate agreements with international and domestic energy companies; poor incentives to increase gas reserves; and downward pressure on international gas prices which is affecting industry profitability.
A significant amount of the country’s natural gas is flared, or burnt off, because many oilfields are unable to capture the associated gas production.
Government data show that 12 per cent of the country’s total gas output was lost to flaring in 2015, resulting in heavy revenue loss for the government.
Gas wasted by oil industry flaring on the rise Nigeria warns oil groups not to treat it like ‘trading colony’ Meanwhile, production is held back in parts of Nigeria because facilities have not been built to develop the resource and distribute it to homes, businesses and factories.
“Right now there is a lot of stranded gas that is not even getting to the market,” Mr Kachikwu says. “The infrastructure gap is huge.” Mr Kachikwu has set about decoupling policies for gas and oil production, to give the former enough attention.
Industry specialists say it is a sign that, after years of promising change, the government is trying to deliver on its ambitions.
I do hope that they succeed in doing this.
Government officials say they need investment from the international energy companies already operating in Nigeria. After years of access to Nigeria’s lucrative oilfields, these players are being asked to provide the funding and technical expertise to produce gas. Several deals have been signed.
Oil services company Schlumberger is providing almost $700m for two offshore fields that have not just oil but substantial gas reserves.
France’s Total has signed a gas supply agreement with the Gas Aggregation Company of Nigeria and Greenville Oil and Gas for the construction of a $500m liquefied natural gas plant.
Royal Dutch Shell’s Nigerian business has signed a $300m agreement with Shoreline Energy to develop, market and distribute natural gas around Lagos.
Mr Kachikwu says the need to invest in gas is all the more important as global demand for oil will peak in the next 20-30 years, long before Nigeria’s oil is expected to run out, meaning its reserves will lose value.
A global push towards cleaner energy will only create greater demand for gas and renewables.
“The longer you wait the less the value [of oil],” he says. “We need to make it favourable to develop gas in its own right.”
Hopefully very soon, Nigerians can utilise the gas that is flared for personal use in homes.
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