Minister of Petroleum, Dizeani Allison Madueke
Private operators in Nigeria’s oil and gas sector have described the progress of work of the Federal Government’s Gas Master Plan (GMP) as being static and without dynamism.
While assessing the progress of the Federal Government’s initiative to drive investment in Nigeria’s gas sector, key operators in the Nigerian oil and gas industry noted that the initiative had lost its original drive and would need to be swiftly bolstered by the government to achieve its expected objectives.
Specifically, the Managing Director of Oando Gas and Power Limited, Mr. Bolaji Osunsanya in a paper entitled: “Domestic Gas Market: Challenges and Opportunities for Expanding Gas Utilisation,” which he presented at the 2012 edition of the Nigerian Gas Association (NGA) International Gas Conference and Exhibition in Abuja, noted that the plan was now static while contract awards were hanging.
Osunsanya asked the Ministry of Petroleum Resources to assume adequate ownership of the initiative to ensure sustenance of the initial momentum in the plan, at the same time pursuing timely implementation of strategic framework in the initiative.
He also spoke of the essence of adequate public communication on status of work achieved in the initiative.
The Nigerian GMP, which was approved in 2008 is part of Nigeria’s resolve to become a major player in the international gas market as well as lay a firm framework for gas infrastructure development and expansion within the domestic market.
The plan is described by the government as a guide for the commercial exploitation and management of the nation’s gas sector but investors at the conference explained that the commercial framework for gas lacks incentives while disordered state of infrastructure in the sector contribute lack of investment in Nigeria’s gas sector.
Osunsanya revealed that already, attempts are being made at circumventing the gas infrastructure design on the pretext of fast-tracking projects that are based on untested concepts.
He added that the waning momentum in the implementation of the GMP and reforms in the sector were major challenges that had thrown up questions regarding the ownership and implementation of the plan.
“We recommend that the ministry - in lieu of the agency envisaged in the PIB - rises up to the day and provides the much-needed leadership for a dynamic planning process and a result-oriented and guided execution of plans,” Osunsanya said.
He said the challenge with domestic gas utilisation is significant with infrastructure disconnect and poor connectivity between supply sources and end-users, adding that domestic gas producers have the challenge of connecting to the main arteries.
Also, raising other fears regarding gas pricing and issues with fiscal policies in the sector, the General Manager, Upstream Gas at Shell Petroleum Development Company (SPDC), Mr. Victor Okoronkwo, noted that the current Domestic Supply Obligation (DSO) as prescribed by the government exposes large suppliers of gas to double jeopardy.
DSO volumes were introduced by government through its National Gas Supply and Pricing Policy of 2008 and it compels producers to dedicate a specific portion of their gas reserves and production for supply to the Nigerian domestic market.
Osunsanya who recommended a new DSO approach, also called for a new gas infrastructure development approach with consideration that the pricing policies for the entire value chain must address market realities.
He said: “Our overall desire to achieve increased domestic gas utilisation will only be achieved when opportunity meets preparedness.
The talk must move away from our internal sector discussions to the public domain. All Nigerians must be sensitised on the issues and pragmatic resolutions must be proffered and implemented in good time.”