DPR Eyes $500m Fresh Investments in Domestic Gas Value Chain

Peter Uzoho

The Department of Petroleum Resources (DPR) is anticipating fresh investments valued at over $500 million from investors who have indicated interest to invest in the domestic value chain of the Nigerian gas sector

The investment value, according to the Director of DPR, Mr. Sarki Auwalu, was derived from the total estimate of the domestic gas supply targets of the individual investors cumulating to 500 million standard cubic feet of gas per day (mmscf/d) addition into the domestic gas market.

Auwalu disclosed this to journalists yesterday in Lagos during his presentation on the agency’s scorecard after one year of operationalising the Nigerian Gas Transportation Network Code (NGTNC) which was formerly launched on August 10, 2020.

He said the expected investments resulted from the confidence boost received by the intending investors after being convinced about the benefits and opportunities inherent in the gas network code

The NGTNC which is one the critical vehicles towards realising the Nigerian Gas Master Plan, among others, was intended to provide a uniform commercial and technical gas transportation and distribution framework.

It was also tailored towards deepening the development of the Nigerian domestic gas market segment across its extensive value chain, support the sustainable growth and impact of the gas sector in the economic development of Nigeria, and enhance the ease of doing business in the nation’s energy sector.

The DPR director said after one year, the agency had recorded a number achievements including the half a billion dollars worth of investments now in consideration resulting from improving investors confidence and getting stakeholders’ buying in into the network code.

“We have improved investors’ confidence in the evolving domestic gas market. Confidence of investors across the domestic gas value chain has shown positive trends through specific requests for regulator’s support for gas supply to the tune of over 500mmscf/d and for investments of over $500 million,” he said.

Auwalu explained that the confidence now existing amongst investors through the network code was absent in the gas market, adding that lack of predictability and availability led to the loss of appetite amongst investors to invest in the domestic gas market.

He said, “In fact, there was nothing to start. But right now, they say, well, if I want to invest, I want to build fertiliser plant, I want to build this, I know where the gas is. I know who is transporting the gas. I know what I need to do.

“There is an agent for me to source the gas and to give me the gas and I know exactly the quality of gas I need to do what I want to do. So, that attracted the investors in the first instance.

“And the volume and the amount is just coincidence. It is not relative that for the half a billion standard cubic feet, it’s half a billion dollar, no, it’s a coincidence. Because each proposal has different amount to be invested.

“So, it so happened that when we took the volume required, it’s half a billion standard cubic feet of gas per day. And when you take the average within various proposals aggregate, it now gives you that amount of money.”

Auwalu said the agency would get the investors to be committed to their intended investment proposals by making sure it continues the implementation of the network code.

He added that over the last one year, the agency has been able to upgrade transmission into the non-discriminatory open access regime, saying national gas transmission and distribution shall henceforth be conducted only through the global industry best practice regime of the network code.

Auwalu maintained that the department has equally in the last one year of operationalising the network, eliminated the discriminatory access to the transporters in the domestic gas market.

According to him, access to transportation of natural gas from gas supply points to gas demand areas across the entire gas value chain in Nigeria can be provided using standard, fair, transparent and non-discriminatory manner.

The director further informed that out of 12 shipper licences, four had been issued to the gas to power sector to enhance power generation in the country.