Stakeholders worry over waning investment in gas infrastructure

Stakeholders are worried over the low rate of investment in gas development as well as the declining level of production.

The experts, who said the vast undeveloped gas reserves could unlock opportunities for driving accelerated economic growth, insisted that with over 200 trillion cubic feet of proven gas reserves, Nigeria could leverage the resources for substantial financial benefits, enhance energy security and support industrialisation.

General Manager, Technical Division, NLNG, Ekeinde Ohiwerei, during his presentation at the Petroleum Policy Roundtable (PPR-XXIV) hosted by the Centre for Petroleum Information (CPI) in Lagos, said despite having the largest proven gas reserves in Africa, Nigeria has struggled with declining gas investments and production.

He stressed that in addition to the debts owed by the power sector now accumulated to N428 billion which has led to delayed and abandoned projects.

Ohiwerei mentioned that Nigeria ranks 108th on the Energy Transition Index, with a massive opportunity to improve its standing through gas and LNG.

He explained that the pathway to the ideal future energy mix is still unclear, with projections showing that renewables will overtake fossils in 2050.

“Nigeria has approximately 209TCF of gas reserves of which 76 per cent are undeveloped, of the 51tcf developed reserves, associated gas comprises 43 per cent while Non-associated gas makes up 57 per cent, of the 158tcf undeveloped reserves, approximately 50 per cent is non-associated gas. This presents a significant opportunity for further growth in Non-associated gas,” he said

He, however, said the recent presidential directives and Executive Orders are expected to unleash investment worth $10 billion in the short and medium term and improve the ease of doing business in the petroleum sector.

Addressing the issue of pricing, Ohiwerei said gas prices already adjusted upwards in 2024 as the domestic base price for the year is $2.42 per MMBTU, gas for Gencos was adjusted from $2.18 to $2.42 per MMBTU, commercial gas from $2.50 to $2.92 per MMBTU.

He stressed that 2025 round of gas price reviews would likely result in higher pricing to cost-reflective levels, incentivising more supply and the adjustments to electricity tariffs and settlement of legacy debts by the government will further incentivise gas and power.

He urged the regulators and federal government to develop and institutionalise regulatory frameworks that support energy security, sustainability and equitability.

Ohiwerei emphasised that fiscal incentives should be leveraged to attract local and international funding, investments and partnerships, stressing that the maturation and security of robust infrastructure backbone should be accelerated to unlock gas-powered economy with investment in technology, innovation for long-term breakthrough projects, increased cost efficiencies and massive investment in human capital development through PPP.

Also, Chief Executive Officer, Seplat Energy, Roger Brown, said Nigeria would benefit from much-needed investment in production and gas development.

He mentioned that Seplat had increased production across its portfolio of acquired assets as Post-IPO, investment in gas infrastructure has yielded fruits with oil and gas production mix now at 59 per cent and 41 per cent respectively at the end of the 2023 financial year from 83 per cent and 17 per cent pre-IPO.

“The increase in reserves was due to the discovery of new reservoirs in OML 40, booking of volumes from the Abiala marginal field, and conversion of 2C resources to 2P in OML 53, Investments in alternative evacuation routes have helped to stabilize production at 44 kboepd.” he said.