Kachikwu: Despite Gas Resources, Nigeria Currently in Full-blown Energy Crisis

Ibe Kachikwu

*To commence FEED contract for transnational gas pipeline with Morocco

By Chineme Okafor in Abuja

Nigeria is currently going through a full blown energy crisis, and could experience this for a long time if it fails to articulate a sound policy framework that focuses intensely on its gas sector, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, disclosed Monday.

Kachikwu, in his ministerial address at the 11th edition of the international conference and exhibition organised by the Nigerian Gas Association (NGA) in Abuja, explained that the country’s continued dependence on oil alone to run her economy was hurting her and she would need to quickly refocus attention on her abundant gas resources.

Though represented by his Senior Technical Adviser on Upstream and Gas, Mr. Gbite Adeniji, the minister’s disclosure came at a time the Nigerian National Petroleum Corporation (NNPC) stated the country’s plan to build a transnational gas pipeline with Morocco was gaining momentum with plans to sign the Front End Engineering Design (FEED) contract for the project soon.

In his remarks on Nigeria’s energy situation and government’s plan to address it using new policy instruments, Kachikwu said: “To set the scene, the policy (National Gas Policy) highlights the following headwinds confronting Nigeria currently and in the coming years: Nigeria is going through a full blown energy crisis in spite of its abundant gas resources.”

He explained that Nigeria no longer enjoyed priority attention from oil and gas investors, adding that southern and eastern African countries now compete especially for investment in Liquified Natural Gas (LNG) with her.

“Secondly, there is a much more constrained international environment with the mounting new LNG suppliers coming on stream globally and Nigeria is competing for investment with Southern and Eastern Africa.

“Prices of oil are forecast to fall after 2030, and stay low for a long period after that with a possibility of absolute fall in demand for oil and a related impact on price of gas,” the minister noted.

He stated that there were also domestic challenges the country has to clear to develop her gas industry and overcome the energy crisis she is going through.

According to him, “Then, there is the challenging domestic environment with security of supply risks, the sector governance and business environment issues. We could add more to these headwinds based on the recent reports of the Nigerian Bureau of Statistics, the World Bank and IMF who have made it their business to track our micro economics.

“Based on these headwinds, Nigeria has a challenging future and must therefore broaden its economy beyond oil, hence the thrust of the gas policy is that we need to refocus our economy using the comparative advantage of our gas towards achieving gas-based industrialisation.”

He said the policy recognised the possibility of export revenue from gas utilisation, and that Nigeria’s location makes it better positioned than any other country to provide cheaper gas for fuel to countries across the world.

Kachikwu equally informed the audience that the country has commenced the review of the 2008 National Domestic Gas Supply and Pricing policy, as well as the overall issue of gas pricing in order to present a clearer signal to investors.

He said the government would expect operators in the country’s upstream oil sector to support its gas policy and not stand in its way, and added that the stability of the country’s power sector would be critical to the overall success of the government’s gas policy.

Similarly, in his remarks, the Group Managing Director of the NNPC, Dr. Maikanti Baru, explained that a feasibility study for the Nigeria and Morocco transnational gas line has been done, thus paving the way for the project’s FEED contract to be signed.

Baru said on this: “In June 2018, Nigeria signed a Memorandum of Understanding with the Kingdom of Morocco on a regional gas pipeline that will supply gas to most of West African countries and extend all the way to Morocco and Europe. The feasibility study has been completed and we are about to commence the optimisation of the study outcomes to be followed closely with the FEED.”

He added that the challenges of the country’s power sector has continued to ensure that up to 500 million metric standard cubic feet per day (mmscfd) of gas meant to generate about 2,000 megawatts (MW) of electricity is shut in.

In his opening remarks at the conference, the President of NGA, Mr. Dada Thomas, said Nigeria could be better served with a regional and not just a national gas development plan, with countries around the West African region tapping from gas lines and volumes from the country.

“It is indisputable that the countries in the West African region and the ECOWAS community are intimately linked to each other in many different ways. Thus, there is a need to initiate the dialogue at the national and business levels of how to develop a West African regional gas master plan that would serve as the roadmap for each member country to develop or modify and roll out its own gas master plan,” said Thomas.