Oil & Gas
Unresolved Infrastructure challenges stifling gas sector growth
Stakeholders in Nigeria’s gas sector have insisted that unresolved challenges in gas infrastructure will continue to pose bigger barrier for development in the sector.
They observed that Nigeria as one of Africa’s leading oil producing country no doubt is endowed with abundant gas resources which holds huge potentials for unprecedented growth, however a cursory look at developments in the sector today suggest that the existing infrastructure does not provide robust technical and commercial framework for gas.
Industry analysts opine that if the issue around infrastructure is not tackled, willing local investors will continue to shy away from putting their money into production of gas.
They are of the view that Gas projects will become more profitable if indigenous companies are given access, stressing that it will be easier for local companies with proven track records to attract investors to execute projects that can unlock gas for Nigeria.
Analysts were unanimous in their calls that if government doesn’t address pressing issues bedeviling gas sector in the country currently, there will not be one penny investment in gas infrastructure, in gas development, in gas projects in Nigeria in the foreseeable future.
Chijioke Mama, Founder of Energy Datar a Lagos-based advisory firm observes that the gas sector in Nigeria is progressing as an attachment to the oil sector and thus gas is sometimes treated as an incidental resource. Nigeria’s oil and gas laws contain many evidences to this and it should be discontinued.
Mama asserts that there should be a proper decoupling of the gas sector from the oil sector with frameworks that will enable it to progress independently. “This includes dedicated gas exploration licenses and gas utilisation specific laws. Once this is achieved we will see improvements and accelerated efforts in other areas such as infrastructure, pricing, technology and skills development”. He said
Gas infrastructure in the views of Ayodele Oni, an energy expert and lawyer is a very expensive project, but the private sector is willing to invest provided there is a willing buyer willing seller system; provided they can earn decent rate of return for their investment.
“Nigeria’s gas development in the medium term could derive much from local demands as from export, if not in volume but in value”. He said.
Oni says a strategic effort towards solving the issues around gas is the need to incentive gas projects by introducing a “gas preference” rule in the award and renewal of our current acreages.
To him, “The gas price must also be liberalised so that operators are incentivised to enter into the industry. We also need to aggressively clamp down on flaring. The government may need to guarantee gas supply agreements so that potential entrants into the market are assured of payment as the current off-takers are not yet fully stable”.
Oni is optimistic that this will set the tune for a sustainable commercial framework underpinned by “credible and enforceable gas contracts, and a price regime that is commercially driven and recognises the long term affordability across different buyers.”
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