By Anayo Ezugwu
TONY Attah, chief executive officer, Nigeria Liquefied Natural Gas, NLNG, has identified inadequate infrastructure and security of assets as the major challenges facing gas development in Nigeria. He notes that the slow pace in the development of infrastructure is a great concern.
Attah, who disclosed this in a live interview conducted by Frank Aigbogun, Publisher of BusinessDay, during the BusinessDay Annual Energy Series, said current gas transportation infrastructure was a bottleneck to domestic gas supply. According to him, there is a need for an aggressive gas infrastructure blueprint and backbone pipeline infrastructure development such as the AKK pipeline currently being financed by the federal government.
“Pipeline vandalism is another critical challenge. Gas-based industries suffer from frequent gas supply outages due largely to vandalism, militancy, sabotage. The need to provide more security for the protection of Oil and Gas Assets, and Infrastructure, cannot be overemphasized in order to encourage investment in gas development, production, processing and transportation/distribution.
“A Fixed/regulated gas price does not guarantee willing seller/buyer arrangement, which will engender firm investments and returns. Under-investment in gas exploration, appraisal and development activities is a major challenge. There is paucity of investment in gas processing facilities as well due to inconsistent policies, unattractive commercial framework, security of investments, etc. All these have led to decline or stagnation in gas reserves, production, and commercialization.
“The ease of doing business index in Nigeria is still regrettably low, despite FG’S efforts to move the needle in that area. Government support is required to provide incentives and guarantees that could act as an enabler for investments. Frequent violation of contracts and payment obligations with no recourse for redress is a major impediment. Legal frameworks need to be strengthened to curb this,” he said.
Attah also said that inconsistencies in government policies discourage investments and fuels violation of contracts. He noted that agencies of government need to be aligned to deliver long term aspirations beyond immediate and short-term revenue targets. “Liquidity issues facing the power sector has a direct impact on the liquidity of the entire gas sector. Deregulation of the Power Sector by adopting the Willing Seller and Willing Buyer philosophy will guarantee commercial tariffs that will sustain the industry and thus entrench development and utilization of gas reserves.
“Nigeria has abundant gas reserves (probable 600TCF and proven 200TCF). Nigeria is ranked 9th globally in terms of proven gas reserves, but most of it remains untapped. Australia with 128 TCF has 88MTPA LNG Capacity, Malaysia with 97 TCF has 29 MTPA output, Indonesia with 103TCF has 26 MTPA output, while Nigeria with 200TCF is still at 22MTPA, with potential to grow to 30 MTPA with NLNG T7. Concerted efforts must be made to deepen gas utilization for export as LNG & NGLs. The government must support companies, especially NLNG’s aspiration to further grow even beyond Train 7.”
– Sept. 35, 2020 @ 12:55 GMT |