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FDI in gas: A dreamer’s perspective

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Nigeria being Africa largest Oil producer is a fact many around the world are familiar with and in spite of the many challenges in the industry, this fact remains and at 202 trillion scf of proven natural gas reserves and another 600 trillion scf of unproven gas reserves, it is also home to the largest gas reserves in the continent and 9th in the world.

As the world is on exodus to alternate energy sources and cleaner fuels, natural gas remains the cleanest fossil fuel and is one the Nigerian economy can and should have sustainable planning and development about but instead only 25% of the proven gas reserves are being produced while the rest is rid of on the altar of “Gas flaring”.

So why isn’t the government doing more to harness this sustainable potential of Gas? It is worthy to note that there have been improvements in infrastructure like the expansion of LNG train 7 which is anticipated to attract $10 billion in FDI through 35% improvement in upstream Gas production and policy wise, the Multi Year Tariff Order 2(MYTO II) which intends to bring parity to Gas prices through economic instruments as the bulk of produced Gas is locally used for power generation.

The journey ahead is long though as economic development for gas is still ways behind. The Nigerian Gas Flare Commercialization Programme (NGFCP) for instance seeks competent third party investors but haven’t addressed the gaps in gas infrastructure, financing of the projects and the management of the linkage with Oil production as it is Associate Gas (AG) which is being flared.

Also, on the linkage with oil production, the newly adopted Deep Offshore and Inland Basin Production Act (DOIBPA) which handles Production Sharing Contracts (PSC) lacks addressing Associated Gas production which 100% is being escrowed by the federal government (FG) without any concessions to the IOC contractors who bear the financial risk of the enterprise despite any equity on the acreages.

Developing gas is a capital-intensive venture and without further government investment in infrastructure and concessions to potential investors and wholesome legislation addressing economic benefits for potential investments, there is discouragement for FDI in the sector which requires long term sales contracts.

Investment in gas is all the more important as it will bring economic development and due to its capital-intensive production, discourage the current thieving of natural resources thereby proving a sustainable economic growth through investors’ confidence and stakeholders support in the country. A popular saying goes, the best time to plant a tree is 25 years ago, the second-best time is NOW.”

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