The Midstream and Downstream Gas Infrastructure Fund (MDGIF) has said indigenous companies seeking its equity support for gas projects must demonstrate secured gas supply and confirmed buyers to establish their commercial viability and attract investment.

Deputy Director of the Fund at the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Elvis Duruji, disclosed this during a session titled “Scaling Energy Options: Unlocking Gas and Renewables through Processing and Infrastructure,” at the ongoing OTL Africa Downstream Energy Week in Lagos.

Duruji said the availability of gas feedstock and guaranteed offtake were critical considerations in the Fund’s decision to take equity stakes in projects, as they determine expected returns and overall viability.

“The security of the gas feedstock is very important,” he said, stressing that project operators must also secure gas supply agreements with producers.

He noted that the location of projects was equally important, particularly for Compressed Natural Gas (CNG) facilities, which should be situated at gas processing plants or close to CNG mother stations.

“For CNG projects, proximity to the gas processing plant is very important; you must have security of gas supply. We also ensure that you have a gas supply agreement with producers.

“What is the volume and price that the producer is willing to give to our would-be equity partner? This always affects their credit returns and internal rate of return. This is what will determine the project viability, and this is key,” he said.

On market access, Duruji said developers must identify buyers for their products and provide the necessary infrastructure to deliver gas to the market.

“The offtake is very important,” he said, citing Greenville LNG as an example of a company that had developed the northern market.

“We need to know the offtakers and the regasification facility. The same thing for CNG; you need to get a compressor,” he said.