By Adewole Kehinde
I came across the good news few hours ago via a tweet that NNPC and Sterling Oil Exploration and Production Co. Ltd have signed a Gas Development Agreement (GDA) in the Oil Mining Lease (OML) 143 at the NNPC Towers
The tweet further said, “This latest milestone provides the terms for the development of OML 143 Gas, providing gas for the domestic market which aligns perfectly with the Federal Government’s National Gas Expansion Programme (#NGEP)”.
The signing by Mal Mele Kyari, Group Managing Director of NNPC, is a great milestone as well as a testament to NNPC’s commitment to facilitating the nation’s transformation into a gas-powered economy.
I foresee that the deal would not only help reduce gas flaring and its environmental hazards but would also promote gas production and utilization in the domestic market.
A lot of investment opportunities abound in the natural gas sector of the Nigerian petroleum industry. Increasing attention is now being given to this vital sector. Government’s aspirations for the gas sector include creating new industries out of the old oil industry; capturing economic value and generating as much revenue from gas as from oil by 2010. Others are developing the domestic gas market and, ending gas flaring by 2008.
Remarkable progress has been recorded towards the realization of these objectives. Of the current annual gas production of about 2,000 Bscf, about 40% is flared. This is a drastic drop from the 70% proportion flared before the advent of this administration. The hitherto flared gas is being channeled into gas powered projects for rapid utilization and monetization with a view to maximizing value addition to the nation’s natural gas resource by 2010.
Domestic gas consumption is expanding as a result of the ongoing power sector reforms while gas export which was non-existent prior to 1999, has received a strong boost.
Comprehensive and integrated gas utilization Master plan/programmes have been embarked upon, in which LNG and IPP developments are being given priority. The expected increased export earnings from LNG, coupled with adequate domestic power supply from IPPs, will strongly support and broaden economic expansion and urbanization, increase the income generating capacity of Nigerians and lift the general wellbeing. It will further reinforce Government’s efforts towards integrating the Host communities into the mainstream of national development and growth.
Following Nigeria’s gas reserves currently estimated at 182 TCF (trillion cubic feet) with a projected growth rate of over 70% by 2025, the nation’s gas sector has proven to have the potential of being a key player in the emergent global natural gas market.
Up until now most of the nation’s natural gas production has been flared or re-injected to enhance greater crude oil recovery.
I must commend the NNPC and its partner, SEEPCO for its unwavering commitment to gas development and commercialization in the country, which has led to the establishment of a Special Purpose Vehicle that will help expand gas utilization in the country as a cleaner, cheaper and more reliable alternative form of energy.
It is my hope that this partnership would help the parties fulfill the pledge it made to support the efforts of the Nigerian government to eliminate gas flaring by monetizing it.
Adewole Kehinde is the Publisher of Swift Reporters and Energy Sector Fellow/consultant to Abuja Chamber of Commerce and Industry Policy Centre and can be reached via 08166240846, 08123608662
