Minister of Petroleum, Dizeani Allison Madueke
After what looked like another project that was about to go belly up, the federal government’s goal to increase gas for the domestic market has been given gravitas with Oando Plc’s investment in gas transmission for industries across some states, reports Festus Akanbi
One year after the flag-off of the federal government’s target to encourage investment in gas production for the local market, there are strong indications that the problem of power supply, especially to the various industries in the country, still remains one of the challenges that gives the current administration sleepless nights?
Last year, at the launch of the gas programme, Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke said the gas revolution which was aimed at achieving significant improvement in gas availability for all and would reposition Nigeria as the undisputed regional hub for gas-based industries would engender unprecedented growth in Nigeria’s gas supply from the current 1 billion cubic feet per day to over 10 billion cubic feet per day by 2020. She assured that the administration of President Goodluck Jonathan was determined to use the vast gas resources in the country as a catalyst for the aggressive industrialisation of Nigeria.
Yet, the question raised by industry watchers as the nation continues to grapple with epileptic sector was why has it been difficult to rollout the gas-to-power programme in the face of greater challenges to power generation in the country?
However, amidst the feeling of despondency over poor power supply to homes and industries, some industry operators have silently been laying the foundation for the revolution with considerable investment in projects to facilitate the supply of gas nationwide.
Making CNG Available
In this regard, one of the leading operators in the energy sector in the country, Oando Plc is investing in compressed natural gas (CNG) which, experts explained will not only make natural gas available to industries not captured in the existing arrangement but would also help to promote the culture of using gas as an energy stock for industrial purposes.
Compressed Natural Gas (CNG) is a fossil fuel substitute for petrol, diesel, or propane/LPG. The CNG facility will deliver natural gas in compressed form, bottled in huge cylinder vessels to customers that wish to adopt natural gas as fuel. It will also be used to serve customers that have been unable to connect to the gas pipeline grid due to inability to meet the cost of pipeline connection.
Although it produces greenhouse gases, it is a more environmentally clean alternative to petrol and diesel, and is much safer than other fuels in the event of a spill (natural gas is lighter than air, and disperses quickly when released). CNG may also be mixed with biogas, produced from landfills or wastewater, which doesn't increase the concentration of carbon in the atmosphere.
Presently, exploration of the opportunities presented by CNG is being championed by the Nigerian Gas Company, a subsidiary of NNPC. Furthermore, a statement on the website of the Oando subsidiary, Gaslink Nigeria Limited, last week, stated it had built gas stations at its Egbin and Warri offices and converted some of its vehicles to run on gas.
The statement reads: “At Gaslink, we have taken up the challenge to build on NGC's experience by supporting relevant government agencies in drafting developmental policies to encourage the use of CNG. To this end, we have started the commercial demonstration of the CNG project in Nigeria, by encouraging our existing customers with fleets to install dispensers and undertake fleet conversion.
“Also, in its drive to promote the use of gas in the nation’s industry, Oando Gas and Power Limited, a leading indigenous natural gas distribution and captive power solutions company, and a subsidiary of Oando Plc late last year entered into an agreement with the United States Trade and Development Agency (USTDA) to jointly fund a feasibility study towards the development of an interstate natural gas transportation pipeline from the Excravos-Lagos Pipeline System to other south-west states.”
A document obtained from the company further explained that already, a study is ongoing to evaluate technical and economic considerations for the development of a natural gas pipeline originating in Sagamu in Ogun State and passing through Ibadan (Oyo State) and Ilorin (Kwara State) before terminating at Jebba, Kwara State. The pipeline will also have extensions to the adjacent states of Osun and Ekiti.
According to the agreement which was signed on behalf of Oando Gas and Power by the company’s chief executive officer, Mr. Bolaji Osunsanya, and the United States’ Consul General to Nigeria, Mr. John Stafford, who signed for the USTDA, the supply of natural gas to the south-west states will provide an opportunity for industries in the region to access a cheaper, reliable and cleaner fuel that will boost power generation and economic growth through increased industrialisation.
A source from the company added this development was in line with the current drive by NNPC to boost domestic gas supply under the Nigerian Gas Master Plan.
Commenting on the partnership, Mr. Osunsanya, stated, “The USTDA assistance provides the much desired boost to our aspiration to develop the Nigerian gas grid, and in so doing, support the federal government in achieving its gas revolution agenda.” Commenting further, he added, “Oando Gas and Power continues to seek opportunities to expand its gas infrastructure to reach more industries through the pipeline distribution grid and Compressed Natural Gas stations.”
In his contribution, Mr. Stafford stated, “The U.S. Trade and Development Agency is pleased to partner with Oando Gas and Power Limited on this important project, which will be of mutual economic benefit to the United States and Nigeria, and will serve to facilitate trade and strengthen our countries’ economic ties.”
A company official also put Oando’s investment in the gas pipeline system today at $200 million, as its gas distribution footprint now includes Lagos, Akwa-Ibom, Cross River and Rivers States. The company currently supplies gas to nearly 200 leading manufacturers in Nigeria is also developing a CNG facility to supply additional natural gas to industries outside the pipeline coverage.
In March 2011, the federal government unveiled the gas revolution agenda with the aim of engendering industrialisation in the country through massive utilisation of natural gas, a resource Nigeria holds in abundance. With proven gas reserves of 187 trillion cubic feet and a further undiscovered potential of 600 trillion cubic feet, Nigeria is positioned to accelerate industrialisation, thereby creating jobs which in turn will lead to socio-economic stability and security.
Globally, natural gas is the most efficient energy source today in terms of heat and energy generation. It is a cheaper, safer and environmentally friendlier alternative, to other forms of energy.
The role of gas in national transformation and industrialisation cannot therefore be down-played. Countries such as Brazil and Indonesia have used natural gas as a catalyst to develop their industrial sectors and have moved from low value added production to the export of highly sophisticated products such as aircraft.
Chief executive, Oando Plc, Mr. Wale Tinubu stated that the recent commissioning of 128km South-south natural gas pipeline by his company was a major step in actualising the federal government’s gas revolution.
“First, the project illustrates the importance of public and private sector partnerships in the development of critical national infrastructure. As we have seen with this project, the synergies for both parties have resulted in the delivery of yet another economic catalyst for businesses in the south-south.
It is clear that when the enabling environment is created by the government, businesses and our economy will thrive and create jobs.
“Secondly, this natural gas pipeline project reinforces our ideology at Oando that Nigerians are capable of delivering ingenious world-class solutions to the challenges facing us as a nation.”
According to him, Oando has earned its pedigree as the leading indigenous pipeline development company in Nigeria. “Our gas and power subsidiary pioneered private sector piping and distribution of natural gas to industrial and commercial consumers.
In the Lagos greater area, over 120 industries are connected to our 100km Gaslink grid, cutting their energy costs by as much as 50 per cent.
This has tremendously improved their profitability and made them globally competitive brands, able to employ thousands of Nigerians.
That is the multiplier effect of Oando projects on the lives of our people. We have operated this franchise for more than 11 years now without any safety incident,” he added.