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FG urges to monetize stranded gas fields … 412Tcf gas remains untapped

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OREDOLA ADEOLA

As parts of measure to increase the revenue base of the country against the backdrop of the falling oil price, stakeholders at the just concluded Natural Gas Business forum of the Nigerian Gas Association held last week in Lagos, called for the monetization of the stranded gas fields across the country. This according to them is a key enabler for economic and national growth.

According to Engr. AntighaEkaluo, Deputy Director, Gas Monitoring and Regulation, Department of Petroleum Resources, DPR, out of the 600 trillion cubic feet (Tcf) of estimated gas reserves endowment, based on the United States, Geological survey, the country can only boast of about 108 Tcf of gas reserve , out of which some volumes have been stranded. He also noted that as at 1st of January 2015, the reserves life index stands at 79 years.

He said, ”Nigeria is endowed with abundant gas resources and the sector holds huge potentials for unprecedented growth. The existing legal and regulatory framework, written primarily for oil does not provide robust technical and commercial framework for gas. There is therefore the need to pass the PIB into law, which will underpin the ongoing sector reforms.

”With the existence of gas potentials in inland basins, Benue Trough, the natural gas accumulation is mainly concentrated in Niger Delta Basin. However some substantial discoveries were incidental to exploration for crude. The current gas reserve distribution by contract are indigenous firms, 13 percent, Marginal oil field operator, 2 percent, PSC 12 percent, Joint Venture with NNPC 73 percent .

He also added that the gases are available but not developed due to economic and physical constraints. He added that the gas reserves in remote fields are un-economic for monetization, associated gas reserves without gas gathering systems.

”The factors responsible for the stranded gas includes capital expenditure, stifling growth of gas infrastructure, immature and sub-commercial domestic market,  disincentive fiscal terms , absence of robust legislative and commercial framework for gas.

He charged that efforts must be put in place by the Federal government to pass the gas sector policies, which according to him will provide the country with the opportunity to harness and get maximum value from its stranded gas resources.  He noted that effective gas sector development is a catalyst for growth and will have a multiplier effect on the country’s economy

“To harness and monetize stranded gas the government must facilitate competitive fiscal terms and pricing for gas, deepen market penetration and sustain demand growth. The government must also facilitate third party access to stranded gas and vigorously pursue the completion of gas gathering and utilization projects.

“It must pursue alternative funding model for gas  infrastructure  projects, address gaps in regulatory  and commercial frameworks across the gas value chain , adopt new technologies geared towards harnessing stranded gas” he noted.

According to the ChimaIbeneche, Chairman Falcon Corporation Limited, an energy firm, stranded gas is an economic phrase. He noted that all natural gas is stranded in nature and normally requires investments to turn it into a useful resource by linking the gas in the reservoir to a consumer in a viable market.

In his statement , “the requisite investments usually include policy changes that help create economic justification for gas exploitation; exploration investments to identify and quantify the gas reservoirs; gas field development investments for construction of production wells and for gas conditioning; distribution investments required to transport the gas from the well head, or gas gathering station to the consumer.

“The exploitation of the gas as an economically viable activity requires all the combination of policy changes, technical and financial investments, and other factors to harness the potentials of the stranded oil gas” he said.

Ibeneche identified that the economic reality that the United States, that used to be a leading importer of Nigeria’s oil is now approaching self-sufficiency. According to him the consequence is that there is a huge decrease in the market demand for Nigeria’s sweet light crude. He however urged the Federal Government to be more proactive in harnessing the potentials of the sector.

The revenues from the export of gas has become more significant because of the global softening in oil prices with no immediate sign of recovery to the US$100 per barrel world.  The demand gap for gas created by the electricity generation sector should be good for stranded gas, though it will require stabilising the recent transformation and privatisation of the electricity sector.

He also noted that there are potential markets for gas in transportation and also in domestic heating and cooling, which indicate that gas is certainly complementary to oil in driving Nigeria’s economy. He also noted that the potential for major growth and direct impact on the economy is far greater for gas than for oil.

He however called on the Federal Government to increase the country’s investment in the gas development and distribution to achieve the economic viability of stranded gas all across Nigeria.