GAS MONETISATION - Africa’s premier report on the oil, gas and energy landscape.

All posts tagged GAS MONETISATION


Saipem Wins Contract to Manage the Libya-Italy Undersea Gas Pipeline

Saipem has been awarded a contract to ensure the supervision and the subsea intervention services of the GreenStream pipeline throughout the offshore and onshore sections at the Mellitah (Libya) and Gela (Sicily, Italy) terminals.

The new contract, awarded by GreenStream BV, one of the leading midstream players in the Mediterranean Sea, merges the activities that Saipem has been undertaking for GreenStream since 2008 as to asset integrity, inspection, maintenance and emergency pipeline services, and expands them to cover a wider range of scenarios and customer’s needs.

The activities will be managed by Sonsub, Saipem’s center of excellence for robotics, underwater technologies and services, and executed in coordination with the Saipem Engineering Hub located in Fano, Italy.

The scope of work streamlines the integrated management of survey data and critical spares, the provision of specialized engineering services related to asset integrity and readiness services for repair interventions in case of a wide range of damage scenarios. Specifically, repair interventions in case of damage will be performed via the SiRCoS technology, a remotely operated repair system industrialized by Sonsub and qualified to operate in water depths of up to 2,200 meters.

With this award Saipem will contribute to managing the integrity of a fundamental underwater infrastructure for the Italian energy supply with an integrated approach, thus confirming the company’s leadership in the underwater domain with promptly available and efficient solutions. It also consolidates the long-term cooperation between Saipem and GreenStream BV, which in 2002 awarded the company a contract for the pipelaying of said pipeline, a project thanks to which Saipem achieved the record for the deepest pipelaying with anchors.

 


‘Natural gas development demands long term commitment and trust’ –Charles Osezua

Charles Osezua was so passionate about the prioritisation of gas over crude oil that he earned himself the moniker, Gas Man, from no other than the legendary Aret Adams who was his boss then at NNPC. A strong advocate of gas production and utilisation, Osezua has shared his thoughts, ideas, interventions and regrets around the subject in his book; The Rise of Gas: From Gaslink to a Decade of Gas. In this interview he throws more light on issues touched upon in the book while highlighting what he thinks is right and wrong with the Decade of Gas.

What was the trigger for you to put down your thoughts?

I had published a number of papers and articles and also designed and taught a mini-MBA programme around gas development and utilization at a number of institutions, but my efforts at publishing a book failed each time I tried. That was until my wife told me that all she wanted for her birthday was my book on the rise of gas. This request motivated me to re-examine my previous efforts from writing a teaching book to a more simplified book for a broad-based audience while still offering analytical insights on the Nigerian gas industry, from the perspective of a witness.

Audience at the Book Launch, in April 2024

In your book, you described gas as the queen of hydrocarbons. What does that mean?

I use the word “queen of hydrocarbons”, as a metaphor, to help the reader understand the delicate nature of natural gas, the care it requires in handling, and its power to bestow abundant economic blessings  on  nations who are  able to harness it. Natural gas is the cleanest and most versatile of the hydrocarbons. It is both a fuel and feedstock. As fuel, it emits fewer carbon dioxide and particulate and lends itself to the most efficient applications. As feedstock, it is the source of a myriad of petro-chemical products; fertilizers, formaldehydes, and many more which we use in our daily lives.

In Chapter 4, you shared a very sad story about a huge policy summersault that dumped years of research and a gas pricing policy into the bin of history and set us back. Decades later, how hurt does that memory make you feel?

Sad is the word! It is like a bad scare, each time I think about that policy reversal, it reminds me of the socio-economic development we missed out on, and that makes me very sad. Sometimes, it is difficult to explain to people the true cost of that decision; there was the possibility of having five other states become commercial hubs like Lagos. There was the fact that it stopped our nation from becoming one with steady electricity like Aba, a diversified economy led by the Agriculture and agro- processing sector, maybe you can appreciate what I am saying.

Barbarians at the Gate!-“Our midstream gas projects had a tough time. For example we signed with ExxonMobil, to develop the Ibeano project, at the point of FID, the MD, simply told us the gas was no longer available. In his words, “at the time we signed an agreement with you, we also told you we were conducting a study on gas utilization…and now we plan to utilize the gas.”  Unfortunately, more than twenty years later, the gas is still being flared!”

Let me try to explain.

In 1999, when I met the Governor of Lagos State, Bola Ahmed Tinubu, now the President and Commander-in-Chief, of the Federal Republic, to seek the letter of no-objection to build Gaslink, I assured him that the coming of gas in Lagos would resuscitate, the moribund industries, in the seven industrial estates in the greater Lagos area of the State, with the economy of the state permanently changed for the better. He believed me. With cheaper and reliable supply of energy, industries were resuscitated and blossomed, creating jobs and a thriving economy. Years later the industrial landscape of Lagos has changed, powered by gas; with independent power plants, fertilizer plants, petrochemical, etc. What is important here is that what happened to Lagos, could have occurred in Kano, Kaduna, Port Harcourt, and Onitha, because they all had industries that were moribund because they were energy stranded. The proposed gas thermal power plants in Abuja, Kaduna Kano, and Enugu, by the letter of that study and policy, would have replicated what we have today in Aba, in terms of power reliability, and the fertilizer plants proposed in the scheme, for Abuja, Kafanchan, Makurdi, etc. could have replicated the Dangote fertilizer plant in Lagos!

This is just to give an indication, without counting the opportunity cost and consequences of unemployment and in its wake, the security challenges that have bedeviled our nation! Yes, the cost can only be imagined and, it makes me sad and pained.

What we tried to do in Lagos was to show that it was possible to develop gas infrastructure in accordance with international best practices, power industry, create employment and have a thriving economy for the state.

You can now imagine what the Nigerian economy would have looked like, with multiple “Lagos states”, a well-developed Petrochemical industrial complex, a thriving Agro industrial sector, and 24/7 power supply, with all the multiplier effect! That was what we envisioned for the nation. So, it is painful when you reflect on our current realities against the possibility that was assured in that policy.

2020 to 2030 was declared the decade of gas in which Nigeria will place renewed focus on gas as the fuel of choice for powering Nigeria’s industrial ambitions. 4 years in, do you think that we are really in the Decade of Gas?

The declaration of the decade of gas by government, up till very recently, was more or less the usual Nigerian way of doing things; bold pronouncements with little action, following in the footstep of “the accelerated gas development and utilization policy,” of the Goodluck administration, and “the 7Big Wins,” of the Buhari administration, etc.  The decade of gas, to my mind, was supposed to be a declaration of a state of emergency for the gas industry, enabling government to exercise extraordinary powers to set goals in terms of gas resources and infrastructural development are achieved within a set timeframe. Unfortunately, however, we did not see such moves, rather it was business as usual, with gas flare sites and marginal fields being allocated to political jobbers. Hopefully, with the recent efforts at adjusting the price of natural gas for power generation companies, one is cautiously optimistic that government is beginning to think of the issues that have bedeviled the development of the gas industry and hopefully we may, someday get to the promised land, of willing buyer and willing seller which was enshrined in the 1989 policy. The decade of gas will begin for me in earnest when we see massive private sector investment but this will only happen when government creates the enabling environment, and with sincerity reinvigorate the plans and programmes for gas utilization!  Natural gas development demands long term commitment, and therefore verifiable trust.

President Tinubu was instrumental, as Governor of Lagos state, to the successful take-off of Gaslink as a provider of gas to industries. Today, he is president and his Renewed Hope Agenda is focused on prioritizing gas as alternative feedstock. He mentioned the purchase of CNG buses for transportation at the start of his administration. Are you involved in any way in making this happen and how well do you think this would be applied?

You are absolutely correct, his letter of no-objection kickstarted the process. To your specific question, on the Renewed Hope Agenda, the answer is no. I am not involved.

You were not afraid to name names in your book. You made particular mention of the fact that no government official demanded or received a bribe during the negotiations for Gaslink to supply gas to the industrial clusters in Lagos. Has that been your experience in other places you have done business?

Unfortunately, the experience in Lagos differs from other places because in Lagos, both the State and Federal governments collaborated with me; we saw the project from the perspective of shared national interest.  Government officials and the private investors like me at the time, saw each other as collaborators for a common objective, for the development of our country. When I met the then Governor of Lagos State and presented my plan, his response was; “I am looking for people who will help me develop, Lagos into a city the Blackman will be proud of, and your plan fits in right there.” Continuing he said, “you will not present it to me alone, but you will have to present it to the full Executive Council.” That I did, and he set up a committee of Commissioners, under the Chairmanship of Ogbeni Aregbeshola to facilitate my project!

However, this was not the case with most other places where we tried to develop gas infrastructural projects. A case in point was in 2004 when we had an agreement with Addax to develop Izombe gas processing plant in Imo State. We had the support of the state government, but we had unexpected challenges from my own constituency; NNPC. Even with Ministerial intervention, we still could not break through. Eventually, my Board resolved it was better to terminate the project, because we were bleeding money! We were charged $1,300,000.00 for storage, for the more than one year we experienced delays in shipping the storage tanks we had already transported to Long Beach port, California. We were paying, for the gas processing plant we acquired, which was in storage for more than two years, in Houston! It was a painful business decision, but more importantly, it shows how the business environment and people’s attitude to national interests have changed, across the Nigerian business landscape.

NNPC Was an Obstacle-“My experience in Lagos was not the case with most other places where we tried to develop gas infrastructural projects. A case in point was in 2004 when we had an agreement with Addax to develop Izombe gas processing plant in Imo State. We had the support of the state government, but we had unexpected challenges from my own constituency; NNPC. Even with Ministerial intervention, we still could not break through. Eventually, my Board resolved it was better to terminate the project, because we were bleeding money! We were charged $1,300,000.00 for storage, for the more than one year we experienced delays in shipping the storage tanks we had already transported to Long Beach port, California. We were paying, for the gas processing plant we acquired, which was in storage for more than two years, in Houston!

From the success of Gaslink you moved mid-stream. Share with us your unique insights and experiences during those adventures.

The midstream was an adventure with its unique challenges, which were made more complex by intrigues, backstabbing or conflicts of interest. It is important to note that Izombe, which I just used in my analogy, was our first midstream project, it failed. We signed various other agreements with different IOCs, completed feasibility studies and derisked the project, but  at the point of Final Investment Decision, we found out that the IOCs were just leading us on, without any intent to see the project come to fruition!

For example we signed with ExxonMobil, to develop the Ibeano project, at the point of FID, the MD, simply told us the gas was no longer available. In his words, “at the time we signed an agreement with you, we also told you we were conducting a study on gas utilization…and now we plan to utilize the gas.”  Unfortunately, more than twenty years later, the gas is still being flared!

We had a similar experience with Shell, where one of the Senior Managers, finally told me: “I can understand SPDC spending so much money to develop a project, but I cannot understand your perseverance. The truth is, as an IOC, we cannot implement the government Accelerated Gas Development and Utilization policy because you cannot shave a man’s hair while he’s not present.” In the midstream not even the government could enforce its own policy decisions, so both the investors and the nation lost!

However, we were fortunate with PNG, the Egbaoma gas processing plant. There we essentially took over a failed plant, re-engineered it and built it into a Nigerian success story, with plant availability in excess of 95%.  Platform Petroleum gave us the opportunity to prove, that a Nigerian company can build and operate a gas process plant safely. Thank God, we have been doing that now for more than eight years.

The “years of burning money” cost us billons and stopped the country from moving forward. Do you think we will ever recover the lost years?

We can recover the lost years if we get serious but not the resources. Fortunately, we have enough gas reserves to build up our economy and compete favourably.

You wrote glowingly about Aret Adams as a cerebral technocrat and oil and gas industry leader who was ahead of his time. What do you think his legacy is for the Nigerian oil and gas industry?

Aret, was a great explorationist, who led efforts into the Nigerian frontiers. He made great discoveries in the Nigerian Offshore and advanced exploration in the frontier areas of the North. As a visionary, he designed the modern day NNPC, a company that can compete with its peers as a mega national corporation in the global market. Unfortunately, his drive to enthrone meritocracy in the NNPC, cost him his career. I think his legacy is his pursuit of excellence, and today, in recognition of this, the Aret Adams Award is the highest award bestowed on earth scientists by the Nigerian Association of Petroleum Explorationist (NAPE).

The NNPC has finally been unbundled and many of the dreams Aret Adams had are being fulfilled. What do you think he would make of the state of affairs?

The unbundling of NNPC, was a major desire of Aret. Today, NNPC is in transition, but Aret would have pushed for accelerated actions, to see the company take its rightful place, as a mega-national corporation.

This book helps clarify the opacity surrounding the oil and gas business, but it could also lead to controversies as people read and present their own perspectives. Do you think more people who had ring side seats like you should write their own memoirs and biographies?

I hope so. They owe it to future generations to provide an eyewitness account and provide insight into why we are where we are, and what we could do differently.

Finally, you are still an active man. 5 years from now, do you think the bug will bite and you could decide to write another book?

Always a possibility. We leave that to the future.

 


‘You Can’t Come Clean with African Cooking Without Investment in LPG Infrastructure’, Sahara Argues

The Sahara Group has described the dearth of adequate infrastructure for cooking gas as the most daunting challenge to ramping up clean cooking across Africa.

It also thinks that this challenge offers a great business opportunity.

Ijeoma Isichei, Head, Business Development (Gas), Sahara Group and a senior manager at WAGL Energy Limited (An NNPC Limited and Sahara Energy JV), has advocated investment in bulk storage, transportation, filling facilities, LPG cylinders, seamless distribution, and retailing, through industry-led expansion programs, support from developed economies, and well-established public-private-partnerships, among others.

Ms. Isichaei, noted that there was “limited storage infrastructure to support the growing demand for LPG in Africa, making the region reliant on imports and shipping”.

She spoke in Paris, at the Summit on Clean Cooking in Africa, organised by the International Energy Agency (IEA).

LPG (Butane), also known as cooking gas, is widely regarded as an efficient and clean-burning cooking fuel used by almost three billion people.

CITAC estimates that the demand for LPG in the Sub-Saharan region would almost triple by 2035, compared to current levels. According to the World Bank, regional economic blocs on the continent have set ambitious targets for LPG penetration and consumption to drive almost exclusive LPG deployment for cooking by 2030.

IEA estimates “that wood and charcoal represent the primary cooking fuels of 1Billion people in Africa,” Isichei referenced. This is not healthy. “I believe that opportunity lies in the greatest challenge,” Isichei declared.

Isichei called for more LPG advocacy platforms that would serve as a meeting point for governments, the private sector, and international organizations to give traction to global clean cooking solutions. “I propose more public and private partnerships. A clear example would the partnership between Sahara Group and Petroci, the Côte d’Ivoire National Oil and Gas company towards the construction of 12,000 Metric Tonnes LPG storage facilities in Côte d’Ivoire.

 

 

 

 

 

 

\

 

 

She added that multi-stakeholder collaboration would also help improve awareness and LPG adoption as against biomass and kerosene and accelerate alignment of policies required to make LPG production, storage, transportation, and distribution seamless across Africa.


SONATRACH Awards Construction of 20 Gas Trains to Baker Hughes & Co

Algeria’s state hydrocarbo firm Sonatrch has awarded Baker Hughes and Marie Technimont  the supply of 20 compression trains based on Frame 5 gas turbine and BCL compressor technology.

The plants are to be installed across three gas boosting stations within the Hassi R’ Mel gas field. Located 550 km south of Algiers,

Hassi R’ Mel is the largest gas field in Algeria and one of the largest in the world, representing a key source of energy supply for Algeria and Europe.

Baker Hughes, itself a large American oil and gas engineering contractor, claims that its proven technology solutions are expected to play a central role in the project by boosting and stabilizing the pressure of natural gas and increasing production at site, “which will enhance Algeria’s domestic energy system and economy as well as Europe’s energy security”

Packaging of the compressor trains, as well as manufacturing of the compressors and testing of the trains, will take place at Baker Hughes’ facilities in Italy.

The new gas-boosting stations are part of Algeria’s ambitious plan to strengthen its role in the global energy market and its commitment to natural gas as a key energy source for socio-economic development. Algeria became the second-largest gas supplier to Europe in 2023, according to Bloomberg NEF, further strengthening the country’s role in enhancing the energy security of the continent, particularly in Italy where Algeria represents the biggest single source of import.

The Hassi R’ Mel Project is part of a broader strategic collaboration between Algeria and Italy, which includes recently signed agreements to foster bilateral cooperation and provide financial support for Algeria’s gas production as part of the Mattei Plan. The Mattei Plan seeks to promote cooperation between Africa and Italy along five main policy pillars: education and training, agriculture, health, water and energy.

 


Invictus Signs a Second Gas to Power MoU from Untested Zimbabwean Asset

MoUs are statements of wishes and the company still has to prove economic commerciality of the Mukuyu wells with flow rates…

Australian minnow, Invictus Energy, has signed a second Memorandum of Understanding for sale of gas from its hydrocarbon asset onshore Zimbabwe.

The deal to provide natural gas for a 50MW Gas-to-power project for Eureka Mine, one of Zimbabwe’s largest gold mines, comes three months after an updated MoU with expanded mandate was signed for Mbuyu Energy, a Zimbabwean consortium led by IPP developer Tatanga Energy, a deal which envisages delivery of up to 1,000MW of electricity, if consummated, “with demand for an estimated 1.4Trillion cubic feet of natural gas”, Invictus claims.

Invictus says it finished 2023 by declaring dual discoveries during in its Mukuyu-2 drilling campaign, in what it described as a transformative year for the Company and its shareholders.

But MoUs are more of statements of wishes and Invictus still has to prove economic commerciality of the Mukuyu wells by running Drill Stem Tests (DSTs) which will show flow rates and the deliverability of the reservoirs.

Invictus  has signaled it is awaiting Petroleum Production Share Agreement (PPSA) with the Republic of Zimbabwe,  and has been engaging the responsible cabinet level Ministers, but its recent statements also indicate there’s much more to be done to reach commerciality: “The upcoming working programme includes a well test at Mukuyu-2, preparation for three dimensional (3D) seismic over the Mukuyu gas field and preparing long lead items for a new high impact exploration well, the location of which will be determined following full interpretation of the acquired CB23 infill seismic survey programme”..

 


ExxonMobil Invites Contractors to Prep for the Vast Rovuma LNG Project in Mozambique

ExxonMobil has launched several tenders for Front End Engineering Design for gas gathering and subsea as well as basic improvement in the installed camp facilities; on its huge Rovuma LNG project in Mozambique.

Those are, of course, secondary to the FEED contract for the actual LNG plant itself, which currently features a competition between Saipem, Bechtel, and an alliance of JGC and Technip Energies, all contesting for the job, with the winner expected to deliver the main engineering, procurement, construction and commissioning contract.

The supermajor is on course of taking Final Investment Decision on the 18Million tonnes per annum Liquefied Natural Gas Plant which will monetise trillions of cubic feet of gas in the Area 4 concession in deepwater Rovuma Basin.

In one of the new tenders, the work scope involves  engineering, procurement and construction contract providing a 2,500-person construction camp in Cabo Delgado province, expanding the existing 500-bed pioneer camp at Afungi to accommodate an extra 700 beds, construction of a permanent camp able to house about 2500 beds and providing operations, maintenance and security services for both the pioneer and permanent camps, during and after their construction periods as well as clearing and grubbing — the removal of trees, shrubs, stumps and rubbish — in ‘strategic’ zones that cover a total estimated area of 418,000 square metres. The contractor will also be handling engineering, procurement, fabrication, shipping, construction, installation, commissioning and project management of these work scopes.

A second tender calls for a FEED plus optional EPCI contract for the subsea-to-shore gas gathering facilities, involving the deepwater installation of subsea manifolds, foundations, control distribution systems, flying leads and rigid well jumpers, as well as installation of umbilicals in onshore, shallow water, and deepwater domains. This tender includes the EPCI of pipelines in onshore, shallow water and deepwater environments and deepwater in-field flowlines, rigid jumper spools and other subsea kit. This bid covers dredging, relocating corals and seagrasses and escarpment crossings and also includes mechanical completion, pre-commissioning and commissioning support of the subsea hardware, including the two main umbilicals — running from the gas field to shore — and nine in-field umbilicals which are being secured by ExxonMobil under a separate EPC contract.

ExxonMobil has been reported as saying it would take a final investment decision in 2025 on the project, which rolled off to the back of the burner in 2021 due to fatal attacks by Islamist insurgents on Palma town and its environs in Cabo Delgado province, including the Afungi construction site for its LNG trains — and those for TOTALENERGIES’ smaller 13Million TPA Mozambique LNG project.

 

 


French Major Expands Gas Development Partnerships with Algeria

French major TOTALEnergies and Algerian state hydrocarbon company SONATRACH have signed a Memorandum of Understanding aimed at concluding a hydrocarbon contract in the north-east Timimoun region, under the aegis of Law n°19-13 governing hydrocarbon activities.

This Memorandum of Understanding outlines the realization of a work programme for the appraisal and development of gas resources in the North-East Timimoun region, in synergy with existing processing facilities for production from the Timimoun field, to reduce costs and emissions.

“This Memorandum of Understanding reflects our shared willingness to expand our strategic partnership with SONATRACH”, said Julien Pouget, Senior Vice President Middle East & North Africa, Exploration & Production at TotalEnergies.

The two companies had earlier in 1Q 2024,  extended their cooperation in the field of liquefied natural gas (LNG) by extending their contractual relationship until 2025.

By the terms of that deal, SONATRACH will be delivering two million tonnes of LNG to TOTALEnergies at the port of Fos-Cavaou, near Marseille, which will contribute directly to the security of energy supply in France and Europe.


Nigeria’s Gas Price Hike “The bulk of the debts accumulated by Gencos arose post privatization of PHCN”

The establishment of a new pricing framework for natural gas for strategic sectors such as Power is considered a win for upstream gas producers, but that in itself, doesn’t tell the whole story.

In the aftermath of the price announcement, Africa Oil+Gas Report caught up with Eberechukwu Oji, Chief Executive Officer of ND Western, the Nigerian independent firm whose Joint Venture with NNPC E&P Ltd (NEPL) is the largest supplier of natural gas to Nigeria’s domestic market.

Excerpts from the short conversation between Oji and Toyin Akinosho, publisher of AOGR …

AOGR The Government’s increase of the Domestic Base Price (DBP) to $2.42 per Million Metric British Thermal Units (MMBTU). This means increased price of the commodity for power Generation Companies (Gencos) to $2.42 per thousand cubic feet. The price of gas sold to Gencos had been at $2.18 since 2021. Is this good? Plus, no one said anything about willing seller willing buyer. This is still “Price Control”. Is it good or am I getting it all wrong?

Oji: The increment in the Domestic Base Price (DBP) from $2.18/MMBTU to $2.42/MMBTU for the power sector is indeed a positive development for upstream gas suppliers. While the price may not fully reflect the true cost of gas production, it indicates a positive response from the government and regulatory bodies to the concerns of upstream producers. With thermal energy accounting for a substantive portion of Nigeria’s power generation, incentivizing gas production is crucial for meeting the country’s energy needs. 

Regarding the concept of willing buyer and willing seller, it is our view that we need to be deliberate, as a country, to attain a free gas market as quickly as possible. That being said, the DBP directly applies to the regulated strategic sectors in line with PIA. Thus, agreements based on willing buyer/willing seller principles may not be directly affected by the DBP.

You are right, this is still price control. We need to move to willing buyer willing seller as quickly as possible.

Is it possible for you to put yourself in the shoes of Transcorp Power, or, say, Geregu Power? Is this not a little too high for these electricity generation companies?

Considering the perspective of Gencos, it’s understandable to anticipate potential challenges from the price increment, especially from electricity consumers. It’s crucial to recognize that the affected Gencos operate within a regulated value chain, with a tariff model that allows approved fuel cost as a pass-through. Thus, the gas price increment may not necessitate an adjustment to the Gencos’ cost component in the tariff model. However, the gas price increment may warrant an upward review of the consumer electricity tariff.

There is a lot of talk of Legacy debts (and Transcorp owes you a lot of that). Were these debts owed by the old PHCN before the takeover by the Private Gencos? Or were these debts incurred in the course of the last 11 years post privatisation?

The bulk of the debts accumulated by Gencos arose post privatization of PHCN. For most of our own customers, these debts dates as far back as 2014, post the privatization of PHCN.

This increase, which is really an incentive, is coming less than a month after the incentives rolled out on Non-Associated Gas, by the President. Wouldn’t you then call this a month of good tidings?

The recent increase in the DBP, coupled with incentives for Non-Associated Gas, reflects a positive trend in the Nigerian government’s prioritization of the gas sector. However, the gazette by the FGN on incentivizing Non-Associated Gas (NAG) production speaks to greenfield developments in onshore and shallow water locations. There is a need to seek clarity from the regulators on what this means for brown fields as we expect to have access to these incentives in order to fulfil the aspiration of the FGN in increasing the nation’s gas production. These efforts are warmly received by gas producers, underscoring the pivotal role of the gas sector in ensuring energy security, driving electricity generation, and fostering economic development.

As we have always advocated without incentivising upstream gas production, all the beautiful gas plans of the government collapses.

Editor’s note: The Nigerian government announced, the day after the gas price hike, that it had approved an increase of 300 per cent electricity tariff for Band A consumers in the country. Accordingly, power distribution companies (DisCos) will be allowed to raise electricity prices to ₦225 ($0.15) per kilowatt-hour from ₦68 for urban consumers this month effectively from April 1, 2024.

 

 


“The Rise of Gas”; Valuable Knowledge Base, Compelling Narrative

By Afolabi Oladele

Charles Osezua’s The Rise of Gas: From Gaslink to the Decade of Gas, gives a magisterial account of Nigeria’s entry into the comity of oil and gas producing nations, beginning not from Oloibiri as many historians of the sector like to note, but from the Dahomey Basin and then Akata, close to Eket, all the way to the country’s chequered history of gas exploration, waste and utilisation.

The author’s story began with what now seems like a prophetic utterance when late Aret Adams ran into the younger man in Kaduna and called him “Gas Man.”

Aret Adams was speaking in prophetic tones, given Mr. Osezua’s pivotal role, not only in policy formulation driving the development of Nigeria’s gas resources, but more as a serial entrepreneur who has invested in the entire spectrum of gas production and utilisation.

For these reasons, the name, Charles Osezua, will be written in bright lights.

In this book, his account begins in the 1970s and runs its course up to 2023 when energy transition is making daily headlines.

Charles Osezua, author of ‘The Rise of Gas’

On Monday July 31, 2023, President Bola Ahmed Tinubu (BAT) unveiled his economic plan to the nation in the wake of the removal of the fuel subsidy. He declared in his speech that “We have made provision to invest ₦100Billion between now and March 2024 to acquire 3,000 units of 20-seater CNG-fuelled buses.”

What is CNG and what does it portend for the Nigerian gas industry and economy?

This book will provide you with the answers, narrating succinctly how the country could have been using CNG-fuelled vehicles almost four decades before President Tinubu’s pronouncement. It will also chronicle for you, in broad strokes the:

  • irony of a country constrained to import gas and deal with years and years of gas scarcity on account of flagrant flaring of gas; and
  • missed opportunities to harness the stranded gas due to several policy somersaults and reversals across different administrations, the most painful of which Charles Osezua details in Chapter 4 of this riveting book. Ibrahim Badamasi Babangida’s administration’s suspension of a federal government gazette set Nigeria’s gas industry and utilisation back several decades; and all this in spite of the evolution of a Gas Pricing Policy which was predicated on a comprehensive nine-month market survey conducted across all states of the federation, covering industrial clusters with clear data on the potential for gas utilisation.

The book outlines the sad and disheartening story of the nation’s years of burning money that predated the Gas Master Plan.

It is also the story of a young man from “a small village in Ekpoma, with a father who was a farmer and a mother who was an energetic farm produce trader,’ who rose to the pinnacle of Nigeria’s gas industry, undeterred by the failures of national policy.

Driven by what he witnessed as a young man, the tongue of flame leaping into the air in Ugbelli, he was inspired to pursue a course of study that would help address what appeared to be an anomaly. He went on to study Natural Gas Engineering in the US.

On completion of his studies, he joined the Nigerian National Petroleum Corporation (NNPC) where he rose to become a champion, focused on the articulation of policies to monetise the country’s enormous gas resources, starting with the elimination of gas flares, and enhancing the terms for gas development.

Engineer Osezua was years ahead of his time, as the nation is only now waking up to address the issues, he raised regarding gas being the future revenue earner for the country. Many of his works are documented in articles and position papers. These gave him the moniker, Gas Man.

He left NNPC, and his entrepreneurial passion took him first to being part of the group that birthed the Lagos Business School and subsequently, the creation of ground-breaking gas utilisation companies amongst which are great successes like Gaslink and Egbaoma Gas Processing plant.

Gaslink is discussed extensively in this book, and its transformational impact on the seven industrial areas of Lagos provides proof of what could have been replicated on the national scale where Nigerian industries provided with reliable energy supply and feedstock would have produced a range of petrochemical products including fertilizers, ammonia, etc.

The book is funny in parts, tear-inducing in others but at the end, what emerges is composite of what has held Nigeria back for decades thanks to the short-sightedness of our leaders and Policymakers.

This book is a valuable knowledge base for everyone involved in the gas value chain, from students to oil industry workers technocrats and policymakers as we proceed with the transition agenda.

As Chinua Achebe once wrote, “a man who does know where the rain began to beat him cannot say where he dried his body.” Engineer Charles Osezua in this book has shown us where the rain began to beat us and where and what we must do to begin to dry our body as a gas producing nation.

Above is the foreword to the book.

“The Rise of Gas”, published by Radi8,  is set for a public presentation on Tuesday, April 9, 2024, at the Nigerian Institute of International Affairs (NIIA) in Lagos, Nigeria.

About the reviewer, Afolabi Oladele: Following a successful career with 25 years’ experience in the oil and gas industry, primarily with the Nigerian National Petroleum Corporation (NNPC), Mr. Oladele joined African Capital Alliance (ACA) in 1999, retired from ACA after 21 years and worked with many of ACA’s investee companies in several value-adding roles along with full responsibility for the firm’s investor relations. He continues to sit on the Boards of ACA’s oil and gas portfolio as well as financial services companies.

 

.

 

 


Gas Price Hike: Nigeria Nods Again to Upstream Producers’ Demand

By Lukman Abolade

Nigerian oil and gas upstream producers won the second major incentive in one month, when the government announced the establishment of a new pricing framework for natural gas for strategic sectors such as Power, Commercial, and Gas-Based industries.

The country’s Midstream & Downstream Petroleum Regulatory Authority (NMDPRA) set a new price for natural gas sale to electricity producers at 24 American cents per Million Metric British Thermal Units (MMBTU), or thousand standard cubic feet (Mscf) higher than what had obtained, since the last price regime announced by a former Deputy Minister of Petroleum in 2021.

Under the new pricing regime, the NMDPRA set the Year 2024 Domestic Base Price at (DBP) at $2.42 per Million Metric British Thermal Units (MMBTU).

This means increased price of the commodity for power Generation Companies (Gencos) to $2.42 per cubic feet. The price of gas sold to Gencos had been at $2.18 since 2021. For commercial gas, the government increased the price from $2.50 to $2.92 per cubic feet.

The gas price hike comes exactly a month after the gazetting of President Tinubu’s executive orders, granting tax credit incentives for Non-Associated Gas (NAG) greenfield developments in onshore and shallow water locations, with first gas production on or before 1st January, 2029.

As a debate erupted around the affordability of the new gas prices by electricity generation companies, who are owing gas suppliers a huge amount of debt, the government announced, the day after the gas price hike, that it had approved an increase of 300 per cent electricity tariff for Band A consumers in the country. Accordingly, power distribution companies (DisCos) will be allowed to raise electricity prices to ₦225 ($0.15) per kilowatt-hour from ₦68 for urban consumers this month effectively from April 1, 2024.

By some estimates, government and private electricity producers owe gas producers ssome $ 1.3billion.

This raft of incentives is clearly meant to boost investment in natural gas development, and unlock more from the 200Trillion cubic feet estimated reserves, stored in the prolific Niger Delta basin.

Nigeria has grappled over the years with a stubbornly low quantum of electricity supply (between 3,500MW and 5,000M for a population of 200Million people), largely attributed to challenges thrown up by the national grid. The Transmission Company of Nigeria (TCN) has identified several factors contributing to this situation, notably including reduced gas supply and incidents of vandalism.

Nigeria has 26 Grid connected electricity generating plants, with installed capacity of of 12,199MW, out of which only 3,957MW, or less than 32%, was generated in February 2024, according to the Nigeria Electricity Regulatory Commission(NERC). Although 22 gas-fired electricity plants made up 84% of the installed capacity, they delivered only 50.2% of the power generated during the month. Four hydroelectric plants, which make up just 16% of the capacity installed, produced 49.8% of the power.

Part of the reasons alluded for low generation by gas-fired plants is “shortage of gas”. Some consider this argument to be a stretch, but it is a key reason why government thinks there should be more incentives for gas production.

Farouk Ahmed, Chief Executive of  NMDPRA, explained that “The Domestic Base Price at the marketable gas delivery point under Section 167 (1) and other provisions of the PIA shall be determined based on regulations which incorporate among such other matters, the following principles: the price must be of a level to bring forward sufficient natural gas supplies for the domestic market on a voluntary basis by the upstream producers; the price shall not be higher than the average of similar natural gas prices in major emerging countries that are significant producers of natural gas; lowest cost of gas supply based on three tier cost of supply framework; market related prices tied to International Benchmarks”.

.

 

© 2024 Festac News Press Ltd..