Nigeria’s Gas Infrastructure Fund Hits $400m amid Concerns over Decade of Gas Policy Stagnation

•$2bn Upstream FID expected this quarter  

•Lokpobiri bemoans unnecessary summoning of IOCs, independents by N’Assembly

Peter Uzoho in Houston, Texas

The Nigerian Midstream and Downstream Gas Infrastructure Fund (NMDGIF) has so far accumulated to about $400 million as concerns around the implementation of the Decade of Gas (DoG) policy continues to swell, THISDAY learnt yesterday.

This was just as a Final Investment Decision (FID) on an upstream gas project was expected to take place this quarter to give an impetus to the realisation of the decade-long programme.

The DoG declared by the immediate-past President Muhammadu Buhari in March 2021, seeks to power Nigeria’s economy and industrialise the country by using the country’s abundant gas resources as an enabler by the end of 2030.

Providing updates on the policy during the Petroleum Technology Association of Nigeria (PETAN) Luncheon at the ongoing Offshore Technology Conference (OTC) in Houston, Texas, USA, Coordinator of the Decade of Gas Secretariat, Mr. Ed Ubong, revealed that the NMDGIF, which is one of the vehicles for the actualisation of the DoG had accumulated about $300 million to $400 million. 

At the session which centred on the theme: “Harnessing Nigeria’s Gas Potential for Domestic Utilisation and Global Market,” Ubong said about N122 billion had been disbursed from the NMDGIF fund to fund some critical infrastructure projects in partnership with project promoters

“Remember that the Petroleum Industry Act (PIA) also established the Midstream and Downstream Gas Infrastructure Fund. At the last count, when we sort of looked at it, there was maybe about $300 or $400 million sitting in that fund.

“That is an equity fund where government is saying, if you want to build infrastructure, we may not have money to fully fund it. But we are willing to put some seed equity into it to provide for you investor comfort to move ahead. As at last year, that fund had disbursed about N122 billion,” he disclosed.

He expressed confidence that another batch of disbursements would be carried out before the middle of the year to fund more projects.

According to him, these are projects that play in the midstream and downstream to help close the infrastructure gap such as pipelines, Compressed Natural Gas (CNG), mini Liquefied Natural Gas (LNG), Liquefied Petroleum Gas (LPG) among others.

Ubong, however, admitted that Nigeria’s gas sector had been plagued by legacy issues, adding that the most important demand customer for the sector is power, with about 70 per cent, apart from the export market.

He argued that the power sector has struggled on the gas side because the power plants owed gas producers significant amounts of money.

As part of the solution, Ubong noted that in spite of the financial challenges existing in the federal budget, President Bola Tinubu in his magnanimity, had on April 4, 2024 approved the settlement of all reconciled gas to power areas

He said the Minister of State for Petroleum (Gas) was working to start the deductions and draw on that base.

He pointed out that investors needed that kind of confidence that endures that the gas they put into the power plants will be paid for.

“If we don’t do it, we can sit here and hold OTC as many times as possible. Investors will be looking for where they can put gas and get paid.

“So that’s something that needs to happen and it’s happening. And that’s why I said the president is leading the way in enabling gas”, he said.

On the DoG programme, Ubong said progress had been recorded regardless of the perception that it had stagnated, adding that a lot had changed in the gas landscape between 2020  to 2025.

He mentioned the signing of the FID for the Nigeria Liquefied Natural Gas (NLNG) Train 7, the  passage of the PIA, which for the first time provided clear sections that addressed gas issues, particularly gas fiscals and all others.

He also mentioned the FID on the Ajaokuta-Kaduna-Kano (AKK) pipeline project, which has been under construction.

“So we sat down with this same group of people. All the resource holders said, what is holding you from bringing additional volumes to the surface? And how much can you bring?”

During engagements with operators in a bid to actualise the policy, Ubong said they identified 21 projects that would bring 4.7 billion cubic feet (BCF) of gas per day to the surface from the supply side.

That, he said, represented about a 50 per cent growth from the current production position.

He further explained, “69 items were identified as the bottlenecks. We called them things that needed to be unlocked. As of today, 45 of those have been fully addressed.

“We have begun to see some of the benefits. You’ve heard about the FID for Iseni. Total took FID on Ubeta.

“This quarter, we expect a $2 billion FID. Because of confidentiality, I can’t sort of announce it, but we expect another $2 billion FID to sort of happen.”

In his remark, Minister of State for Petroleum (Oil), Senator Heineken Lokpobiri, condemned the unwarranted summoning of the international oil companies (IOCs) and indigenous operators under the auspices of Independent Petroleum Producers Group (IPPG) over issues that are relevant to the oil and gas industry.

Addressing some lawmakers present at the session, Lokpobiri said the frequent summoning of oil companies for issues not even related to their operations was worrisome and a major disincentive to investment in the Nigerian oil and gas industry.

He urged the lawmakers to refrain from such acts and join hands with other stakeholders to improve the industry and grow the economy.

The minister stated, “One thing that is worrying the industry, which is a disincentive to the industry, is the number of times companies are summoned to the National Assembly for things that do not concern them. We want to use this opportunity to appeal to members of the National Assembly to please join hands with us to ensure that we change the narrative.

“Every time I talk to IOCs, every time I talk to IPPG members, the number of summons by National Assembly members, committee on procurement. These committees have nothing to do with the oil and gas industry, but they are summoning them for things that happened some 30 years ago. And we need to also realised that the industry has changed.”

He warned that such unnecessary summoning was not needed in the present oil and gas landscape when many oil-producing countries have emerged and are competing with Nigerian for investors.

“Before now, Nigeria used to boast that we are the giant of Africa, we have enormous reserves. Every country has reserves now. When the IOCs leave Nigeria, they go to other countries in Africa to make investments.

“So if these investments are not made, your constituents will lose, Nigeria will lose. So, please, we want to use this opportunity to appeal to you that as you go back, one of the feedback from this session, tell your colleagues that companies are saying that we are summoning them over things that do not concern them.

“And those summons have never translated to anything. And those summons are not geared towards improving the industry.

“Why are you summoning me for procurement, procurement that has nothing to do with me? You are summoning Total, you are summoning Chevron, you are summoning Shell. For what purpose?”, Lokpobiri concluded.