Nigeria records increase in gas reserves

The Federal Government has announced that the country’s reserves have increased from 186 trillion standard cubic feet (scuf) to 190 trillion scuf.

This was made known by the Director of Department of Petroleum Resources (DPR), Mr Modecai Ladan, at the Annual General Meeting (AGM) of Nigeria Gas Association (NGA) in Lagos on Wednesday.

Represented by the Assistant Director, Domestic Gas, DPR, Mrs Chioma Njoku, Ladan stated that updated statistics on the new national gas reserves indicated that the country now has 190 trillion deposit of natural gas and makes it the seventh in the world and the largest in Africa.

Ladan assured stakeholders that Nigeria has the potentials to become a global super power in Africa because Nigeria ranks third in gas production after Algeria and Egypt, despite being the largest in terms of gas reserves.

He argued that Nigeria can broaden its economy using gas. “It is a critical strategic consideration that must be embraced. We need to design framework that will focus on gas exploration with full support of industry stakeholders,” he said.

Coincidentally, most gas discoveries and the reserves were accidentally discovered during crude oil exploration and stakeholders have been calling on the federal government to institute marginal bid rounds for gas exploration.

On his part, the Senior Technical Adviser, Upstream and Gas, to the Minister of State for Petroleum Resources, Mr Gbite Adeniji, said, “We need to consider opening up gas supply from the inland basins. We can’t rely on the Niger Delta alone. There is a lot of gas in the inland basins. It is time we considered developing gas infrastructure to explore gas in the offshore.”

He noted that about 11 of the nation’s power plants had become dormant due to gas constraints.

“An alternative system from the offshore will help. In the inland basins, there are gas reserves that could lend themselves to some small power plants. We should think about flexibility. We are working hard on gas terms for PSC concessions. We should consider gas development a matter of strategic importance. Therefore, we need to develop an appropriate legal and regulatory framework,” he said.

“We now have to open a big pathway for new players in the gas sector.

The fiscal regime has proven to be the most effective drive of gas development in the country. But most of the projects we have seen are export projects.

The fiscal strategy should focus on prioritising exploration and production activities for gas with proper incentive structure that is globally competitive.

“We need pricing reform. On the supply side, there is a lot of potential. We need market-based pricing for wholesale gas supply. We must have transitional pricing and then we open it up for market-led pricing. I am not in favour of willing buyer, willing seller pricing right now. The time is not ripe,” he concluded.

In his opening remarks, the President of NGA, Mr Bolaji Osunsanya, stated that “Nigeria has experienced a transformational shift in the perceived role of natural gas from an energy source sometimes seen as unreliable and scarce over a decade ago to one that is now recognised as an essential component of a cleaner and more secure resource-based portfolio.”

“Decline in crude oil prices has coincided with a welcome surge in the use of natural gas for domestic and industrial use in developed and developing countries. We are aware that Nigeria’s aspirations for the power sector particularly the significant amplification of the country’s power generation capacity, would be largely based on the use of supply and delivery of natural gas.

“However, despite the abundance of natural gas, Nigeria’s gas fired plants continue to operate below their installed capacity, crippled by the unavailability of gas due to persistent pipeline sabotage.

“This means we have to innovatively create a fuel diversification strategy which will enable about 1000MW of power generation to be supported by using the Liquefied Natural Gas (LNG). This process will require the liquefaction of about 240 million cubic feet of natural gas per day. This large volume of gas can be compressed to about 0.4 million cubic feet of LNG per day.”

He, however, urged the government and operators alike to understand that the first step to take is the creation of a legal and regulatory framework which will eradicate persistent obstacles which have burdened the progress of the sector.