Right gas pricing regime to aid industrialisation, says SPDC

The Shell Petroleum Development Company of Nigeria Limited (SPDC), has restated commitment to support the Federal Government of Nigeria’s goal of using the country’s proven gas reserves to trigger economic activities for gas-based industrialization.

To achieve this, the oil major noted that a robust pricing framework would be very helpful to unlock Nigeria’s proven gas reserves, especially for power, agriculture and industrial sectors.

Local manufacturers have had a lingering issue with gas producers on the pricing of gas for productive activities. SPDC’s Managing Director and Country Chairman of Shell Companies in Nigeria, Osagie Okunbor, said Shell’s support is shown in the company’s multi-billion dollars investment in four of Nigerian National Petroleum Corporation’s (NNPC) ‘Seven Critical Gas Development Projects’.

Speaking at the Nigerian Gas Association’s 12th International Conference and Awards, held virtually on February 25, 2021, under the theme, “Powering Forward: Enabling Nigeria’s Industrialization via Gas”, Okunbor said, “Shell has invested in the Assa North Gas Project; Four Unitised Gas Fields; Brass Fertilizer Company; and the Cluster Development of Okpokunou/Tuomo West (OML 35/62) to support the government’s drive for national development.”

He counselled for robust engagement in discussions for an agreeable price framework to attract investments in the country’s rich gas sector.

Okunbor said the current pricing regime does not quite fit the wider framework of what the gas industry does. “We want to incentivize methanol and fertilizer production, which is extremely important, to gear up our agricultural sector but the price regime now in that sector is lower than the kind of prices that you have for supply to the Power sector and industrial establishments”, he said.

“To make domestic gas work, we do need a right price regime. It might just mean that some sectors are supported more than others that can naturally carry themselves. The Petroleum Industry Bill provides that framework.” Okunbor said.

He urged policy makers to strike a careful balance between trying to raise funds – in terms of the kind of taxes and royalties that are put on gas – and understanding that this is actually much more of a resource that drives national development. “Gas is by far more important as a catalyst for development, he said.”

He said, “I am very happy that NNPC and the Nigerian Content Development and Monitoring Board have taken key roles in these projects. These are positive steps.”

He commended the government’s recent progress in gas development and stated support for NNPC’s aspiration to grow domestic gas usage in Nigeria to 5 billion cubic feet of gas per day from its current 1.7 billion cubic feet of gas per day by 2022.

Okunbor said, “Nigeria has launched out on a few audacious and, frankly, great projects to essentially drive our ambition as a country in this regard. Let’s find a way to make sure that we stay the course and begin to put our efforts in a consistent manner towards downstream where our country can get ultimate benefit for gas.”

With over 200 trillion cubic feet of gas proven, the world’s 9th largest proven gas reserves, Osagie said Nigeria can satisfy both domestic and export markets of gas if the right policies and processes are put in place and the country continues to drive those policies, processes and gas infrastructure.