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FG confirms domestic gas supply hitting 65% in 2021

By Collins Olayinka, Abuja
01 November 2022   |   2:42 am
The estimated performance of the domestic gas supply obligation hit 64.8 per cent in 2021 compared to 50.66 per cent achieved in 2020, Chief Executive Officer of Nigerian Midstream and Downstream Petroleum Regulatory Authority

Farouk Ahmed

Projects 12.2b standard cubic feet to achieve 2030 target

The estimated performance of the domestic gas supply obligation hit 64.8 per cent in 2021 compared to 50.66 per cent achieved in 2020, Chief Executive Officer of Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, has disclosed.

Addressing the 2023 Domestic Gas Demand Requirements (DGDR) workshop, yesterday, in Abuja, Ahmed explained that the 2022 gas demand requirement also marginally increased by 5.9 per cent to 250 million Standard Cubic Feet Per Day (MMSCF/D) over the determined 2021 national gas requirement of 4.232 billion Standard Cubic Feet Per Day (BSCF/D).

The NMDPRA boss said: “As at end of September 2021, the estimated performance of domestic gas supply obligation was 64.8 per cent compared to 50.66 per cent achieved in 2020 (comparing yearly total domestic supply obligation allocation to actual daily supply met). The increased performance of 14 per cent in the preceding domestic gas year can be majorly attributed to the concerted efforts implemented by the regulator and all our stakeholders towards enhancing the performance of the market.”

He added that despite the improved scorecard, the domestic gas market continued to experience significant challenges around infrastructure capacity constraints, payment assurances and long outstanding legacy debts of gas supplied to the power sector poor sanctity of contracts, constraints on the evacuation of generated power and low investment flows into the industry among others.

While noting that as stakeholders kept working towards the development of a robust domestic gas market, especially within the new regulatory regime of the Petroleum Industry Act (PIA), Ahmed assured Nigerians that necessary preparations had been made to ensure that this year’s Domestic Gas Demand Requirements (NGDR) is coordinated in a safe, productive and efficient manner.

The NMDPRA chief executive stressed that the regulatory process of establishing a DGDR is a milestone in the implementation of the PIA 2021, whose key provisions are clear on the supply of wholesale marketable natural gas for the local market.

He explained that in determining a realistic gas demand requirement for the establishment of the domestic gas supply obligation, the regulator has always conducted an industry-wide market review workshop to afford an opportunity to appraise demand levels of natural gas, establish critical enablers for enhanced performance of the domestic market and ensuring collaborations within this critical segment of the national economy with a view to achieving optimal performance of allocated domestic gas supply obligation.

The NMDPRA chief restated the organisation’s commitment to making sure that regulation is optimised across the gas value chain.

On his part, the Manager, Gas Production and Flare Monitoring, Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Jennis Anyanwu, expressed optimism that the nation could meet the 12.2 billion standard cubic feet (scf) target set by the Nigerian Decade of gas.

He explained that there were projects on the ground to assist Nigeria in achieving the goal.

His words: “A notable one is the Nigerian Gas Flare Commercialisation Programme (NGFCP), relaunched in September 2022, that would see to the conversion of current flared gas into useful products, thus making more gas available for local utilisation. There are many other upstream projects that are aimed at increasing the current gas supply and the PIA is gas-friendly legislation with a huge enabler in this regard.

“Currently, Nigeria produces between seven and eight billion scf per day, but with the capacity to increase that production to 12.2 billion scf per day, which is the target of the Decade of Gas if the current momentum by the government continues in the next few years. 2030 Decade of Gas is largely achievable if the government continues to unlock various bottlenecks it has identified impeding FIDs in gas development projects.”

He attributed the improved gas supply to regulatory efforts in driving compliance with allocation and periodic monitoring of producers’ performances.

Anyanwu added: “We do not wait until the end of the year. Even though these reports are got daily to determine compliance level. The companies themselves are aware that gas is the transition fuel for Nigeria. So, it makes sense even for their corporate image to comply with initiatives like this.”

He noted that gas flaring has been a challenge but finding uses for flared gas has become imperative as PIA has made some provisions for punitive measures for gas glaring.

The NUPRC official went on: “Most of the gas that was being flared now comes to the domestic market and that is part of what is driving the numbers. Many companies have completed their flare-out projects within the past two years under review. The NGFCP has been a major push as well. This programme ensures an increase in the supply of gas to the domestic market. We envisage that in the next two years, there will be a better performance if all expectations of the programme come alive.”