Absence of incentives causes investment apathy in gas sector — SPE

The Chairman, Society of Petroleum Engineers (SPE), Nigeria Council, Dr Saka Matemilola, has blamed absence of incentives for investment apathy in the Nigerian gas sector.

He however called for more incentives ranging from securities on return of investment, policies consistency, and other factors as the means to reap the many fortunes imbibed in the gas sector.

Addressing journalists at a media briefing to announce the Oloibiri Lecture Series & Energy Forum (OLEF 2017), slated for March 2, 2017, he stated that the country is running at a loss owing to low incentives in the gas business which remains a hub in Nigeria.

According to him, “for the infrastructure, you need to know how much gas is available for you to be sure that there is sufficient gas to meet the economic demand. It is also important we have companies that will recoup the sector; we only have gas here, so they can just pipe it down through that same infrastructure. But it has to make economic sense. The problem is that, for pricing the people who are willing to invest is not encouraged by the economies.”

He argued that Nigerian banks do not have the capacity to cover investment in the sector, adding that, “It will take billions of dollars to put into the gas business, which the Nigeria banks don’t have. Investors want security of their funds and our environment does not provide that opportunity. Again if it is domestic, the person that would want to buy the gas will not want to buy it above a certain cap. The issues are quite much.”

He explained that the Federal government lacks fund to develop the decay in infrastructure. “If I may ask, does the government have to money to develop infrastructures in the gas sector? Because there are many pressing needs that funds can solve like health and education.”

He hinted that the petroleum policy is such that has no clear direction for the gas industry, saying “the way it is now in the petroleum policy, it is such that they are not clear yet of what they want to do with gas policy. All the promises to enable achieved the goals is not stated or clear.”

He however urged full scale domestic gas utilisation in all sectors in Nigeria which will, according to him, provide the catalyst to transform the nation’s present challenges to an investment attractive gas-based industrial nation.

According to him, “the international consumption has been a success story due to the building of the Nigerian Liquefied Natural Gas (NLNG) in Bonny which has encouraged the government to plan the building of two more LNG facilities in country, in addition to adding more processing trains to the NLNG Bonny.

“Unfortunately, the progress on domestic gas utilisation has been slow. The reason for this is not the lack of market. The challenges range from lack of adequate domestic gas infrastructure and gas pricing mechanism, to the extent that some companies consider it cheaper to burn associated gas, rather than to sell.

“Most of the electric generating plants built, which are meant to be powered by gas, are unable to get gas for one reason or the other. This is not to say there is no progress made in recent times but a lot still needs to be done. Opportunities abound for using gas for home consumption, fertilizer production and powering of locomotives.”