Ekpo …harnessing Nigeria’s untapped gas potential for economic development

In the past one year, the Nigerian gas sector has witnessed a dynamic phase under the leadership of the Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo. His tenure has been marked by notable efforts to drive the development and utilisation of Nigeria’s vast gas resources. However, while progress has been made, significant challenges remain, which underscore the need for a more robust approach to fully unlock the sector’s potential. WALIAT MUSA writes.

The Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, was sworn in to office on August 21, 2023, by President Bola Ahmed Tinubu, who decided decision to split the oil and gas components of the Ministry of Petroleum Resources into separate units, with a minister superintending over each unit.

Despite initial mixed feelings and reactions regarding Ekpo’s appointment, due to his perceived lack of experience in the sector, he has spent his first year in office navigating the complexities of the Nigerian oil and gas industry. Such concerns were understandable, given the crucial role gas plays in addressing Nigeria’s severe energy poverty, driving industrialisation, overcoming years of underdevelopment and securing a better future for the next generations.

In this regard, there have been several initiatives by successive administrations aimed at enhancing the gas sector’s contribution to the economy. These include the Nigerian Gas Master Plan, the Energy Transition Plan/Net Zero Plan, the National Gas Flare Commercialisation Programme (NGFCP) and the Decade of Gas programme. These programmes require a robust leadership and strong collaboration between the government and industry stakeholders to be successfully implemented, hence the initial skepticism about Ekpo’s ability to deliver.

However, he has effectively dispelled doubts and impressed a lot of industry players through his actions. His first year has been marked by significant milestones in advancing the development of the gas sector, driven by various government initiatives with strong support from industry players and stakeholders.

Progress in gas development with major projects
Ekpo’s first year in office has seen several key initiatives aimed at advancing Nigeria’s gas industry. The administration focused on expanding the country’s gas infrastructure, including the construction and upgrading of pipelines, gas processing facilities and storage capacities. These projects are intended to enhance the efficiency of gas distribution and ensure a steady supply to both domestic and international markets.

The multi-billion-dollar Obrikom, Obiafo, Oben (OB3) and Ajaokuta-Kaduna-Kano (AKK) gas pipelines were designed to boost gas supply for use by Nigerians across the corridors they were designed to traverse. Sadly, these projects were abandoned and became almost moribund before Ekpo assumed office. Contractors lacked the push to meet project deadlines. Upon assuming office, Ekpo toured the sites of these projects more than twice within seven months, held meetings with relevant contractors and the management of NNPC, and obtained commitments for their completion.

He met the projects at 40 and 20 per cent completion levels respectively but has taken them to 80 and 50 per cent levels. The OB3 will be completed within the 4th quarter (Q4) of 2024 while AKK will be commissioned before the end of first quarter (Q1) of 2025.

On the Gas-to-Power Initiative, Ekpo has advocated for the conversion of gas to power, recognising the critical role of electricity in driving economic growth. He resolved the lingering 13-year debt arrears between Gas Producers and Generating Companies (GenCos) in the country through a structured repayment mechanism, which has ensured continued investment in the gas upstream space to support the delivery of natural gas to GenCos.

He has also provided the requisite leadership in resolving issues related to the execution of the Gas Sales Purchase Agreement (GSPA) for the Brass Methanol Project, unlocking $3 billion in investments in the gas industry.

The minister, who inherited the $25 billion Nigeria-Morocco gas pipeline project, has been driving bilateral discussions on the project. This pipeline is designed to traverse the Republic of Benin, Togo, Ghana, Côte d’Ivoire, Liberia, Sierra Leone, Guinea, Guinea-Bissau, The Gambia, Senegal, Mauritania and terminate in Morocco, with a spur to Spain for the onward sale of gas to Europe.

Completed Projects
Since his assumption of office, a number of critical gas development projects have been completed. These include the expanded Ashtavinayak Hydrocarbon Limited (AHL) Gas Processing Plant in Kwale, Delta State; the Assa North-Ohaji (ANOH) Gas Processing Plant in Ohaji-Egbema, Imo State and the 23.3km ANOH to Obiafu-Obrikom-Oben (OB3) Custody Transfer Metering Station Gas Pipeline Projects.

At the inauguration of the facilities, President Tinubu had stated that approximately 500 million standard cubic feet (500MMscf) of gas in aggregate would be supplied to the domestic market from the two gas processing plants, which represents over 25 per cent incremental growth in gas supply.

Describing the projects as important facets of the Decade of Gas initiative, Ekpo mentioned that the Federal Government’s intervention policy in the gas sector had seen domestic production increase by 800MMscf/day.

The minister has also inaugurated the 3.1 million metric tonnes standard cubic feet per day (MMscfd) Compressed Natural Gas (CNG) plant undertaken by Tetracore Energy Group in Ogun State; the 5.2MMSCFD CNG/autogas facility at Ilasamaja, Lagos State; and the 300MMscf/d Kwale Gas Gathering Hub in Ndokwa West Local Government Area of Delta State.

He also performed the ground-breaking ceremonies for NesGas 50,000 metric tonnes Liquefied Petroleum Gas (LPG) Terminal at Onne, Rivers State; the Optimera Energy’s natural gas facility in Lekki Free Trade Zone, Lagos; the 3.1MMscfd Liquefied Natural Gas (LNG) facilities by Tetracore Energy Group in Ogun State; and Windek Energy Limited 20,000 metric tonnes LPG depot in Atabrikang Aquaha, Ibeno local council, Akwa Ibom State, which according to him holds the prospect of generating over 100,000 jobs.

Current state of utilisation and challenges
Despite these initiatives, Nigeria continues to face challenges in fully utilising its gas resources as issues like gas flaring, which not only results in loss of potential revenue but also contributes to environmental degradation still persist.

Also, balancing the need for domestic gas supply against the opportunities for export remains a contentious issue. While international markets offer lucrative prices, ensuring adequate supply for local industries and power generation is crucial for sustainable development.

The overall investment climate remains a concern, with persistent issues related to regulatory uncertainty, security challenges and infrastructural deficits, still deterring foreign investment in Nigeria’s gas sector.

Targets
With focus on promoting clean cooking in the country, Ekpo’s administration is targeting the conversion of 250,000 houses yearly to LPG use. He had flagged off the Decade of Gas Grassroots LPG Penetration Programme in Abuja to achieve the goal of having inexpensive, safe and clean cooking energy source available to every household in Nigeria.

Ekpo had explained that the mission of the scheme was to change millions of Nigerians’ lives by converting 250,000 houses yearly to LPG use by 2030. He said the outreach was part of the efforts of the ministry to dissuade Nigerians from using firewood, kerosene and charcoal as cooking fuel for homes, and get them to switch to a cleaner and safer energy source, which is gas. In the last one year, has also brought over 12 CNG retail stations to Abuja and Lagos with plans for further expansion to other states of the federation.

Stakeholders react
Energy Partner at Bloomfield Law Practice, Dr. Ayodele Oni, told The Guardian that considerable progress has been made on fiscal policies, especially with the presidential order aimed at encouraging investments in the natural gas upstream sector.

Oni commended the minister for facilitating a number of noteworthy investments in midstream gas, particularly in CNG and LPG. He acknowledged that the minister has played a significant role in advancing the government’s gas penetration policy, with progress seen in gas pipeline projects and other infrastructure developments such as the AKK pipeline and other international gas pipeline initiatives.

On the expectations from the minister in the coming years, he said: “I expect more international gas pipeline development and more LNG projects coming on stream with better operationalisation of the Petroleum Industry Act (PIA). I also expect more local LPG and CNG production. He also needs to do more to encourage further investments so Nigeria can compete internationally and be a substitute to a country like Russia,” he said.

On his part, an energy expert, Prof. Dayo Ayoade, said it was challenging to fully assess the minister’s performance within one year, given that the PIA has limited the minister’s role to policy and leadership while granting significant powers to the regulators.

He, however, noted that between 2023 and 2024, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has implemented several key regulations concerning gas flaring, gas distribution systems, gas trading, pipeline tariffs and gas pricing.

Ayoade emphasised that the regulator has driven many developments, particularly the establishment of the Nigerian domestic gas-based price, which essentially sets the price that natural gas industries and power plants should pay for gas.

He commended the minister for overseeing significant initiatives, such as the Presidential CNG initiative, with zero VAT for imports of gas, CNG, LPG and related equipment.

“Also under his watch, there’s the oil and gas companies tax incentive. It’s very important to encourage greenfield gas projects especially on shore and in shallow waters. So, the minister has not been idle; but my own view is that we should not judge the minister only on LPG and CNG initiative and what have you. We should not judge the minister on endless initiatives and new policies but on competent provision and securing of a sound legal and regulatory environment, an enabling environment, if you wish, for natural gas investment,” he said.

He called for stronger enforcement and the creation of a favourable environment, both legally and in addressing issues like insecurity, oil theft and other challenges in the Niger Delta to ensure these initiatives can truly thrive.
 
“I want to see the minister look at this gas master plan. In Nigeria, when a government creates an initiative, succeeding governments will just dump it as if it doesn’t exist. What is the Gas Master Plan for? It has been on for a very, very long time. Where have we been on the gas master plan? Are you saying that the initiative is bad? If it’s bad, does it need to be amended? Let’s work on those initiatives that are already in place. Let’s have sustainable gas prices, and very importantly, how are we going to get collaboration between our regulators? There’s a lot of quarrel going on, whether you know it or not, as everybody exercises their muscle to dominate the space and that would not be good,” he said.

Ayoade believes that having a single Minister of State would have been sufficient in the petroleum sector. He argued that the division into Minister of State for Petroleum and Minister of State for Gas contributes to unnecessary friction and hampers seamless transitions.

“If we had one regulator, we would not be talking like this. They would be under one umbrella; but having two regulators now, you can remember there was a quarrel between the authority and the commission as to who should regulate export terminals. Although the commission, NUPRC, was given the nod by the president to do that, I understand that in practice there has been some friction on the field,” he said.