Excitement as NPDC Steps Up Efforts To Increase Gas Supply To Nigerian Market

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Mele Kyari

Onyinyechi Robert

The Federal Government has done a lot in recent times to develop the Nigerian gas market through efforts at the production and transmission levels. Thus, a key project, the Ajaokuta-Kaduna-Kano pipeline that was flagged off by President Muhammadu Buhari a few weeks back is one of such efforts.

With gas reserves of over 200 trillion cubic feet, Nigeria is seen mainly by oil and gas watchers as a “gas province with some oil in it.” However, the domestic gas consumption level is still far from where it should be and spirited efforts are being made by the Nigerian government and the Nigerian National Petroleum Corporation to lead other oil players in the country to produce and transmit gas as well as manufacture more gas-based products like the Liquefied Petroleum Gas and Compressed Natural Gas for domestic use.

In a recent interview, the Minister of State for Petroleum Resources, Timipre Sylva, said,“I will say that gas is the future. There is no doubt in my mind, that for Nigeria, gas is the future. Already, we are seeing the end of the oil economy. All the forecasts are saying that in 2040, oil will no longer become the dominant fuel in the world because of course; you know that there is a commitment to the development of renewables.

“Unfortunately, as a country, we have not joined that renewable race; we are still more or less an oil and gas economy. Nigeria, as you know, is very rich in gas. In fact, some people say that Nigeria is more of a gas territory with some oil in it. That means that we have the option of at least transiting to the renewable energy world through the instrumentality of gas. So that now becomes the option– our route to getting into the renewable economy.

“Gas is now the focus. We want to see how we can grow gas utilisation in Nigeria. So you have the gas flare commercialisation programme which is very advanced now. We are actually also ensuring that gas penetration, the use of LPG, is really deepened.”

Also, speaking in a similar vein, the Group Managing Director, NNPC, Mele Kolo Kyari,in a recent interview, said, “This is the year of gas and it means that we will focus on gas, to deliver gas into the domestic market. There are a number of projects related to this, and, as I mentioned earlier, the OB3 and the expansion of the Lagos-Escravos Pipeline System 2, so that it can extend all the way to West Africa and potentially to Morocco at the end of the tunnel, and the combination of this, with the delivery of the AKK, we will have a trans-Nigerian Pipeline in place, and this will enable increased supply of gas into the network such that consumers in the East and in the West and in the West African sub-region and across the transnational pipeline into the North of the country will be energized.”

In line with the resolve by the government to develop the nation’s domestic gas market, the Nigerian Petroleum Development Company (NPDC), an exploration and production subsidiary of the Nigerian National Petroleum Corporation (NNPC), has said it will boost its gas supply to the domestic market by 600 million standard cubic feet per day in the next three to five years.

The Managing Director , NPDC, Engr. Mansur Sambo, disclosed this recently during a facility tour of the company’s Oredo Gas Handling plant by the Group Managing Director of NNPC, Mallam Mele Kyari, in Benin City, Edo State.

Speaking on the medium term projection of the company, which is currently the highest supplier of natural gas to the domestic market, the NPDC boss said besides the 1billion standard cubic feet per day (bscf/d) it currently produces, the company would add another 600mmscf to its production portfolio in the next three to five years.

Giving a breakdown of the projection, Sambo said the company’s OML 34 was expected to deliver 360mmscf/d, while OMLs 42 and 111 would deliver 120mmscf/d apiece.

He stated that NPDC had revved up production in OML 111 by 2,100barrels per day (bpd) of crude oil and 27mmscfd of gas, thereby increasing cumulative production from the acreage to 10,699bpd.

Sambo, who also announced the successful drilling of Well 16 in OML 111, said the well was essentially for gas with associated crude oil, adding that the plan was for the gas plant to be fed from the well.

On the Gas Handling Facility, the NPDC boss disclosed that the Liquefied Petroleum Gas (LPG) unit would be ready for inauguration in October, 2020.

The NPDC currently accounts for about 10 per cent of the crude oil produced in the country and the company is setting its sights on increasing production to 500,000 barrels per day.

As of May 2019, the company had an oil reserves base of 3.6 billion barrels and gas reserves of 15 trillion cubic feet from its involvement in 29 concessions – 22 Oil Mining Leases and seven Oil Prospecting Licences.

NPDC is the single largest supplier of gas to the domestic market in Nigeria, with about 90 per cent of gas supply targeted at power generation to drive the nation’s economy.

The company plans to produce 40 per cent of the Liquefied Petroleum Gas required in the domestic market from the Oredo facility as part of efforts to boost the consumption of LPG, also known as cooking gas, in the country.

It said in April last year that it would unveil the largest LPG and propane storage and dispensing facility, which is centrally positioned to supply LPG to Lagos, South-South, South-East and the North.

Speaking during the visit to the Benin plant, Kyari described the development as a significant step towards growing the nation’s crude oil reserves and increasing production, stressing that more of such was needed to meet the target of 3 million barrels per day production and sustain the nation’s economic growth.

“This gas facility in particular will deliver at least 240 metric tons of LPG to domestic market within a year and that is a very significant fraction of current level of supply into the market. It will ease the spending on foreign exchange by the country. This is monumental and underscores government efforts of making sure that this is the year of gas. The gas is the cheapest and easiest way of getting development in this country,” the GMD enthused.

He congratulated the management and staff of NPDC for fast-tracking the completion of its Liquified Petroleum Gas (LPG) Gas Plant, reiterating that gas development was key to the nation’s quest for industrialization.

Basically, the NPDC is achieving three objectives; it has increased oil production in OML 111, it will also increase gas production and supply from OMLs 34, 42 and 111 while also producing a big volume of LPG from its gas handling plant.

For the domestic LPG market, the 240 metric tons that will be supplied to the market in the coming months is a welcome development and it is also a big boost to the Petroleum Ministry-driven Gas Flare Commercialisation Programme.

Speaking recently on the objectives of the gas commercialization programme, Sylva stressed, “In Nigeria, we are also ensuring that gas is utilised for the driving of cars. Therefore, we are driving the development of gas-based industries. The president has even recently approved the creation of a gas hub where we will pipe all the gas to so that gas-based industries can spring up. We are focused on the development of gas as a government and I believe that at the end of this tenure, Nigeria would have seen a very clear path to the development of the gas subsector.”

On the preparedness of the NNPC to support government to increase gas usage in the country, the NNPC GMD in an interview said, “Once you produce gas in this country, you will have to deal with the NNPC. We are the upstream partner to all the producing companies. Nearly 80% of the companies have something in partnership with us either as joint venture partners or PSC contractors. So, you require the gas, and the gas will come from NNPC assets. To that extent, we are completely linked to the process of making sure that the gas, either from flare sites or actual non-associated gas sources, is delivered to businesses. And of course we are a very, very widely exposed company in terms of our assets across the country, in terms of our retail outreach, in terms of our customer base, such that for a CNG project to succeed you need the NNPC to be part of it so that we can provide the skills, provide access to our customers and also ultimately link up the transmission network which we are constructing in the AKK and all other assets, bringing all to the table so that those gas resources will be available for expansion . So, we are everywhere, but we are critical in the sense that this won’t succeed without NNPC’s intervention, and we are completely committed to this.”

Robert writes from Benin.