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Government predicts gas price fall, higher demand by 2027


Compressed Natural Gas

With stakeholders expressing concerns about the price of natural gas in the domestic market, the Federal Government has said convergence of factors such as government intervention, inauguration of OB3, NNPC’s Seven Critical Gas Projects, and other upstream gas investment should lead to fall in domestic gas price.
Besides, the government also projected an increase in demand for gas supply in the nation’s domestic market by 393.33 per cent within the next eight years.
With the convergence, it noted that greater power generation and improved sector efficiency would lead to a more dominant power sector and reduction in “Commercial Customers” on the gas value chain.
According to the Nigerian National Petroleum Corporation (NNPC), demand for natural gas by the domestic market, which currently comprise mostly of power and industries, would rise from 1.5 billion standard feet per day (bscfd) to 7.4bscfd in 2027.
But the Corporation said it was making plans to plug this expected rise in demand with its ‘Seven Critical Gas Development Projects (7CGDP), which would bring in about 3.5bscfd of gas in 2021.
Speaking at a recent meeting in Lagos, by the Society for Petroleum Engineers (SPE), the Chief Operating Officer (COO), Gas and Power, NNPC, Saidu Mohammed, explained that the projected demand growth is expected from the western part of Nigeria with a total demand of 3.6bscfd, from the northern area 0.90bscfd; Ajaokuta axis 0.84bscfd; and eastern area with 2.9bscfd.
He also noted that the anticipated completion of the ELPS II Looping and OB3 will be a game changer as hitherto stranded gas would be able to enter the market, adding that projects such as the AKK & NGMC’s Ajaokuta Mini LNG will facilitate gas supply to northern parts.
“There has been an upsurge in the development of gas processing plants, and NNPC has responded by creating a subsidiary company in NGC, to drive all investments and partnerships to develop gas processing plants.
“As more gas-based industries (GBIs) projects are being developed, gas utilisation would significantly increase, which would have a positive effect on domestic industrialisation, employment, and economic wellbeing.”
Similarly, the Special Adviser to the Minister of State for Petroleum Resources, Dr. Timothy Okon, explained that efforts were being made to address the challenges limiting the utilisation of gas.
He noted that although the extractive industries support frontier economy and not development, frameworks need to be developed to promote a competitive market that encourages operators to invest.
He explained further that though sector-based pricing was adopted as a form of intervention in some cases to drive consumption and grow critical sectors of the economy, enterprises that utilise gas for commercial purposes should be willing to pay more.


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