GACN Woos Investors,Reviews 10-year-old Domestic Gas Agreement

0

By Chineme Okafor

Nigeria will review all existing agreements used in transactions within its domestic gas market to reflect modern realities in the market and attract new investments in the sector, the Gas Aggregation Company Nigeria Limited (GACN) disclosed yesterday.

To this end, the GACN stated in a statement sent to THISDAY that it last Wednesday convened an industry-wide workshop which had up to 670 industry operators, comprising the Nigerian National Petroleum Corporation (NNPC), international and indigenous oil companies, gas purchasers, gas trade associations and financial service practitioners in attendance to find better ways of consummating gas transactions in the country.

It specifically said the Master Gas Sale and Aggregation Agreements (Master GSAAs) used in the country’s domestic gas market was being reviewed to provide room for improved investments in the sector.

According to the GACN, the workshop which was headed by its Chairman and Managing Director of the Nigerian Petroleum Development Company Limited (NPDC), Mr. Mansur Sambo, focused on reviews that would engender expedited negotiation and execution of Gas Sale Aggregation Agreements (GSAAs) by industry players, Interruptible Gas Sales Agreement (IGSA) as well as gas swap transactions.

It equally noted that incentivising payment and contract performance, minimising risks and potential for contract disputes, processes to engender new investment in the gas sector, promotion of contract flexibilities consistent with market realities, facilitation of gas trading and gas swap transactions, as well as reducing transactional costs in the country’s gas market were part of the review process.

When concluded, GACN explained that the updated Master GSAAs templates would help to promote gas utilisation and increase domestic gas consumption, including for the purpose of enhancing power generation, deepening the growth of other gas-based business ventures and accelerating Nigeria’s industrialisation.

In his remarks at the workshop, Sambo explained that the review became necessary to support the government’s desire to make gas a credible revenue earner for Nigeria as well as leverage it for the country’s industrialisation plans.

He said: “The year 2020 has proven to be a pivotal year for the gas sector notwithstanding the challenges. The federal governments’ prioritisation of this sector through its strong support for the AKK project, OB3 project, NPDC business expansion and the PIGB, are huge enablers for oil and gas-based industrialisation and sustainable economic development for Nigeria.

“The Minister of State for Petroleum Resources’ declaration of 2020 as the ‘Year of Gas’ is backed-up by several game changing initiatives such as the National Gas Expansion Programme, nationwide gas penetration initiative through LNG-CNG nationwide roll-out, ongoing domestic gas price review; all providing further positive impetus.”

Sambo commended the GACN’s effort to secure broad industry alignment on improvements to the key gas commercialisation document-the GSAA.

“It is also pleasing that other gas sector value expansion documents such as the gas swap framework and the Interruptible Gas Sale Agreement (IGSA) master template would be considered in the course of this two-day workshop.

“I thank all participants for the time spent in reviewing these documents, and urge all to bear in mind that the purpose of this workshop is to constructively discuss and align on the major identified issues with practical recommended solutions proffered,” he said.

Similarly, the Managing Director of GACN, Mr. Olalekan Ogunleye, stated at the workshop that the Master GSAAs have contributed to the growth of the domestic market, but in line with best practice, needed to be periodically reviewed to accommodate current market realities.

“As most of you are aware, the current GSAA templates were developed in 2010 for the various strategic domestic sectors to ensure alignment on key commercial terms across the off-take sectors. While these documents have greatly contributed to the growth of the domestic market, best practice obliges a periodic review to ensure that it continues to reflect the current market realities as well as best practice,” Ogunleye noted.