Enhancing Domestic Gas Utilisation

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Peter Uzoho writes on the need for the federal government to take urgent steps towards enhancing in-country utilisation of Nigeria’s abundant gas resource to drive economic growth and development.

It is no longer a matter of debate as to whether Nigeria is endowed with enormous natural gas resource, however, how to use this resource to develop and transform the nation’s economy and add significant value to the lives of its citizens remains a major issue for decades.

For the record, as at January 2020, Nigeria’s proven gas reserves stood at 203.16trillion cubic feet, according to the Department of Petroleum Resources (DPR) –the regulator of the Nigerian oil and gas industry activities. The nation’s unproven gas reserve is still at about 600trillion cubic feet. These numbers no doubt put Nigeria as a major player in the world gas market as the country currently ranks the ninth largest gas producer globally and the number one on the African continent.

For long, there have been conversations around how Nigeria can leverage the vast opportunities in its gas resource to open up the country for investments, which will in turn lead to massive job creation, enhanced energy efficiency, increased productivity as well as increased revenue to both government and businesses.

Although, Nigeria prides itself as a major exporter of LNG to the world via the Nigeria LNG Limited, making gas available for domestic use through business-friendly government policies and actions will help a great deal in driving economic diversification and competition.

Players in the country’s gas sector are of the view that there is no better time to optimise the potential of the gas resources than now that the whole world is struggling for survival due to the impact of coronavirus.

To them, the pandemic and its attendant economic turmoil has presented an opportunity for the country to look inward by prioritising in-country utilisation of the abundant gas resources.

They believe there should be increased attention to the development of gas infrastructure in Nigeria and the deepening of domestic consumption and utilisation of the commodity in order to boost the country’s economic development.

However, despite the abundant gas potential, Nigeria still struggles to develop and grow its economy, a situation that makes jest of the country at the international front.

“Nigeria does represent quite an interesting paradox. We are major resource holders, major exporter of gas, at the same time we struggle on the domestic front with de-industrialization, with unmet domestic gas demand and insufficiency in gas supply to the power sector for power generation,” President of the Nigerian Gas Association (NGA), Mrs Audrey Joe-Ezigbo, said.

According to her, over the past few years as economy faced several headwinds both on the macro and micro levels, there has been clamour for diversification of the economy to ensure other sectors are equally vibrant, fully functional and also contribute their optimal best to government revenues.

Joe-Ezigbo added that “Gas as we know, is a resource that has the potential to be key driver of industrialization, rapid economic advancement in Nigeria and we see this in several countries that have successfully leveraged their gas resource as feedstock to industry to power their economy.

“Gas is a sector that provides large scale employment. For a country like Nigeria that has the kind of unemployment statistics that we do, we significantly need to ramp up utilisation of gas to create value.

“We know that in using gas for the economy, we are able to create direct employment through the exploration activities, in production, transportation and distribution of natural gas. We are able to provide indirect employment through the industries, the manufacturing sectors and value chain support system that feeds into the natural gas industry.”

She maintained that there is induced employment because as the welfare of those employed in the industry grows, they are able to inject that income in to the economy and create a further cyclical demand for goods and services that are out of the gas industry.
Joe-Ezigbo, said over the last few years, “we have seen a ramp up in domestic gas utilisation but we agreed that export gas still dominate the profile of gas in Nigeria.”

She further said: “Coming out of what has happened with the pandemic, one of the key things that we have realised as a country is that there is a need to focus on in-country utilisation.
“We need to create the channel through which we utilise our own gas in-country to create capacity, to build technology and ensure industrialisation and certainly it will provide the power that we need.

“Whether we talk about driving industrialization, energy sufficiency, agricultural and food sufficiency and accelerating non-oil income generation, there is need to leverage gas resources to create jobs.”

For the Managing Director of Seplat Petroleum Development Company Plc, Mr. Austin Avuru, Nigeria should begin to pay more attention to domestic gas consumption in addition to gas export as a way to drive massive economic growth and development.

He said while the country earns revenue through liquefied natural gas (LNG) export, more critical should be to encourage domestic gas consumption because of its multiplier effects.
Avuru noted that delays in gas infrastructure development had denied Nigeria the needed economic growth, including the power supply challenge currently being suffered by the citizens.

According to him, “in almost 50 years of our industry up to 2010, domestic gas consumption was no more than 300million standard cubic feet per day (mmscfd). When the gas-to-power mantra started, we assumed a transition period of about 2012 to 2015 with a ramp up in power generation and distribution and the projection was that by 2015 to 2017, domestic gas consumption will go up from 300mscuf per day to about 2 billion standard cubic feet per day (bscfd).

“It did ramp up quite rapidly between 2013 and 2015 from 300 mscfd to 900mscfd. In the last five years since 2015, that consumption figure has almost remained flat at about 900mscfd to 1.1bscfd.

“The reason is that for this five years period, power generation has remained flat at about 4,000 megawatts (Mw), when we are supposed to be at about 15,000Mw.”
Avuru pointed out that one of the major constraints associated with sending gas for infrastructure and big industries was inadequate transmission infrastructure.

He said that a combination of delays in finishing gas transmission infrastructure and the fact that power generation has not gone up at all in the last five years meant that, “since we ramped up domestic gas consumption rapidly within three years to about one bscfd, we have stayed that way for the past five years without further increase.”

Interestingly, however, in the current COVID period, the need to increase availability of gas to power Nigeria’s economy becomes more obvious as most of the manufacturing industries witnessed no disruption in their operation because they use natural gas to power their engines.

The crucial role of gas in powering critical infrastructure and industries such as power plants, hospitals and manufacturing industries attests to the need for the resource to be made more available for consumption in the country.

For instance, most of the notable packaged food/consumer goods industries like Chi Limited, Anxin Industrial Technology Nigeria Limited, Promasodor Nigeria, Apple & Pears Limited, who use gas as a cleaner fuel to power their plants are relishing the value they are getting from using the resource.

According to them, using natural gas instead of diesel guarantees them power availability and higher efficiency, hence the need to expand access to it in the country.

“The use of natural gas to fire our gas engines has really improved our power availability, thereby resulting in higher efficiency,” Coordinator, Power Generation, Promasidor Nigeria Limited, David Okhimamhe, told THISAY.

Apart from helping to reduce maintenance cost, and carbon emission and fuel spillage-two major environmental hazards, Okhimamhe listed some other inherent benefits they enjoy from switching from a dirty fuel to natural gas as “increased stability and availability because it is our primary source of power.

“Availability of natural gas minimises production down time because there is no power changeover during production process.”