Delivering Gas to Domestic Market

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With the eventual launch of the Nigerian Gas Transportation Network Code, a critical policy instrument and guide for the gas sector, Nigeria is now in a better position to deepen accessibility and transparency in the nation’s domestic gas market, writes Peter Uzoho

On Monday last week, the federal government finally launched the all-important Nigerian Gas Transportation Network Code (NGTNC), a major milestone that will translate to opening up the space for massive delivery of gas to domestic market.

The virtual launch of The Go-Live of the network code, in Abuja, featured industry players led by the Minister of State for Petroleum, Chief Timipre Sylva; Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari; and the Director of the Department of Petroleum Resources (DPR), Mr. Sarki Auwalu; amongst others.
The code was first announced in February at the third edition of the Nigerian International Petroleum Summit (NIPS) 2020 in Abuja, with a six-month timeline set for the eventual launch.

Lack of such policy tool had been identified as one of the major impediments towards deepening the penetration of gas to local market, with attendant negative impacts on the national economy.
While speaking on the significance of the network code, Sylva said it would help to grow gas infrastructure, expand gas utilisation, curb gas flaring, and provide codes to standardise the gas value chain in line with global best practices.
The minister said the NGTNC was part of the key reforms instituted by the President Muhammadu Buhari Administration to expand domestic gas-to-power, gas-to-industry, and gas-to-manufacturing, and mitigate the challenge associated with gas flaring in the country.

He noted that the gas code would go a long way in deepening economic development, improve gas supply, boost Liquefied Petroleum Gas supply, and attract more investment opportunities in the nation’s gas value chain.
He said following the declaration of 2020 as a year of gas, the current administration was driving key policy and regulatory initiatives that would enhance gas reserves growth to support domestic and export project, adding that other focus was to expand domestic gas supply and address the perennial challenges of gas flaring, with its attendant waste and environmental impact.

Sylva also said the aggregate impact hangs on three anchor programme on gas, namely, the Nigerian Gas Transportation Network Code (NGTNC), National Gas Expansion Programme (NGEP) and Nigerian Gas Flare Commercialisation Programme (NGFCP).
According to him, this would help the sector achieve the presidential mandate of gas penetration, gas-based industrialisation, and economic diversification
The minister said: “Specifically, it is my firm belief that the implementation of the network code, which is a set of rules and principles, guiding the use and operations of gas transportation network system, would deepen the domestic gas market.

“It will also unleash the potentials of accelerated growth and economic development for our nation.
“In the coming months, this code together with related interventions, would enable improved gas supply to power, growth of gas-based industries, domestic LNG, LPG and CNG penetration, as well as enhance revenue to the government and create investment opportunities for our people.”
Sylvia said the DPR had developed the Network Code Electronic Licensing and Administrative System (NCELAS), which would be used by the regulator to receive process and issue all applicable licenses to all network players as well as administer all regulatory roles required to ensure the optimal market impact.

“The NCELAS is a secured online environment that would provide optimum value for all stakeholders that would be operating under the network code.
“With the unveiling of the NCELAS and the execution of the network code framework agreement, the regime of gas transportation through a world class network code would have been firmly established in Nigeria for the benefit of all stakeholders,” he said

He, however, commended NNPC and its gas subsidiary, the Nigerian Gas Company (NGC), for partnering with DPR to meet the six-month target to bring the Network Code to life.
In his goodwill message at the virtual launch of the Network Code, Kyari reaffirmed the corporation’s commitment to working with relevant partners and stakeholders in the oil and gas sector to boost delivery of gas to the domestic market.

He said the corporation was at the centre of gas delivery to the domestic market, stressing that it was involved in all the available gas delivery infrastructure in the country either directly or indirectly through joint venture partnership.
He said the inauguration of the Network Code, designed to enhance the use of gas as a catalyst for national economic development, was an opportunity to enhance gas delivery and utilization in furtherance of the federal government’s objective of transforming gas into a key component of the nation’s energy mix and revenue sources.
He added that the code was an opportunity to widen the income source of gas in Nigeria, noting that the development was the beginning of progress in the gas sector.

“We will continue to give our support to this process to ensure that the full delivery of this process is achieved. We commit to working closely with the DPR to ensure that the target of the government is attained.
“This opportunity has provided the right framework for the transportation of gas from the source to the end user in order to get value. We are happy to have this framework on ground and we are ready to collaborate with all our partners, the gas off-takers, gas producers, transportation companies, shippers, and all those involved in the gas value chain,” Kyari enthused.

Earlier in his welcome remarks, Auwalu noted that the department has emplaced the network code platform and would continue to work with all Industry players for the success of the NGTNC.
He said the gas code would address gas flaring, grow infrastructure and expand utilisation of gas in the country and that it would help to achieve the mandate of the year of gas as declared by the minister.

“The code will guide the rules that governs gas transportation system, secure gas transmission and ensure cost effective tariff for the pipeline management.
“The code will also help boost growth in the sector and six months from now, we will witness a lot of achievement,” Auwalu said.
He noted that the portal for licensing will ensure enterprise structure and will serve as a one-stop shop for network administration.

The highpoint of the ceremony was the unveiling of the Network Code Electronic Licensing and Administrative System (NCELAS) portal and the supervision of the signing of framework agreements between NGC, Gas Hub, and Dangote Fertilizer Limited, by the minister.
Mr. Sheyin Omotola signed for the NGC, Mr. Mansur Ahmed signed for Dangote Fertiliser, while Mr. David Ige signed for the Gas Hub Limited.
The NGC will serve as the transporter while Gas Hub and Dangote Fertilizer Limited will serve as the shippers, with the GACN in the role of agent as provided by the framework.
Ahmed of Dangote fertiliser limited said the development had shown Nigeria’s seriousness on gas matters, adding that establishing rules for utilistation, sellimg and transportational of gas was crucial.
He commended the effort of the government in ensuring that the code was in place and urged all stakeholders to key in for effective gas development in the country.

He noted that the code was a major milestone to drive the gas sector to the next level, adding that the establishment of the code was a step in the right direction, adding that it would be impossible to bring innovations without guideline.
“We will do our best and stand with DPR to ensure that things are done properly for the growth of the sector,” he said.
Speaking on behalf of gas sector participants, the Managing Director of Gas Aggregation Company Nigeria Limited (GACN), Mr. Olalekan Ogunleye, commended the federal government for achieving the launch of the code in spite of the challenges posed by COVID-19.
He assured that stakeholders in the industry would support the effort of the DPR, NGC and others as managers of major suppliers in the country to ensure effective implementation of the code.

“We will be proud to be the first network agent to bring excellence to the implementation of the network code and ensure transparency in the system,” Ogunleye said.