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Nigeria requires N4 trillion to develop gas infrastructure

By Roseline Okere, Houston Texas
07 May 2015   |   11:43 pm
NIGERIA will require about $20 billion (N4 trillion) to bridge to adequately cater for its gas need, the Vice President and Head, Energy and Natural Resources, FBN Capital, Rolake Akinkugbe , has said.
Rolake Akinkugbe

Rolake Akinkugbe

NIGERIA will require about $20 billion (N4 trillion) to bridge to adequately cater for its gas need, the Vice President and Head, Energy and Natural Resources, FBN Capital, Rolake Akinkugbe , has said.

Akinkugbe, who made this disclosure in her presentation titled ‘Global Gas Outlook and Implications for Nigeria’ at the ongoing Offshore Technology Conference in Houston Texas, said that the country’s gas demand is equally set to reach eight billion cubic feet (bcf) by 2020,from around two cf .

She said making gas readily available to service domestic requirements will be a key challenge in the short-term. On the global arena, she said Asia’s top three customers, require 14.4tcf in 2020, which still provides a market for many of Africa’s exporters, adding that attraction of Henry Hub as a cheaper alternative has waned in Asia as oil prices have fallen Exporting Liquefied Natural Gas (LNG) to Asia from US, according to her is more expensive than from Africa, Europe & Australia.

But the cost of developing and extracting, transporting and distributing this gas is tremendous. Price distortions undermine gas products advantage over oil, particularly downstream. Implications are different for producers and consumers. Offtake security challenges make gas less attractive for producers at upstream entry point. Infrastructure bottlenecks limit producers’ options. producers want competitively priced gas-to-power pricing, consumers naturally want cheap fuel sources

In 2012, she said, the US did not import any LNG from Nigeria, stressing that, though imports resumed in 2013. On costs, she explained that gas is unlikely to compete with petrol in the short-to-medium term in Asia despite cost and environmental benefits ‘‘But the cost of developing and extracting, transporting and distributing this gas is tremendous.

Price distortions undermine gas products advantage over oil, particularly downstream. Implications are different for producers and consumers. Offtake security challenges make gas less attractive for producers at upstream entry point. Infrastructure bottlenecks limit producers’ options.

producers want competitively priced gas-to-power pricing, consumers naturally want cheap fuel sources,’’ she said. She however pointed out the urgent need for a regional gas pipeline network.

On the oil price slump, she said: “If we are to consider the worst case, an apocalyptic scenario where prices drop significantly, the biggest concern would be ‘how will this region (West Africa) defend its market share?’ “We have to look inwards to develop our market for our oil and gas resources.

Right now, there is not much of an absorption capacity.” She pointed out that China, the go-to market for West African oil exporters, had its own shale oil deposits. As the technology continues to improve and/or if oil prices reach an economical level, there is the potential for another supply glut.