Opinion

Transforming gas industry with NNPC Network Code

For the Nigerian National Petroleum Corporation (NNPC), its gas subsidiary, the Nigerian Gas Company (NGC), and the Department of Petroleum Resources (DPR), the launch of the Nigerian Gas Transportation Network Code (NGTNC) last Monday was another target met.

 

The code, which is designed to enhance the use of gas as a catalyst for national economic development, was brought to reality within the six-month target duration.

 

Minister of State for Petroleum Resources, Chief Timipre Sylva, who spoke at the occasion, was impressed by the commitment of the NNPC and its partners towards realization of the NGTNC, which is part of the key reforms instituted by the President Muhammadu Buhari-led administration to expand domestic gas-to-power, gas-to-industry, gas-to-manufacturing and mitigate the challenges associated with gas flaring in the country.

 

The Gas Network Code is a logical outcome of the Flare Gas (Prevention of Waste and Pollution) Regulation 2018 issued by President Buhari in his capacity as Minister of Petroleum Resources. It provides a legal framework for the protection of the environment against the effect of gas flaring, prevents waste and creates economic benefits for Nigeria.

 

It seeks to provide legal support to the National Gas Flare Commercialization Programme, a policy designed to eliminate gas flaring through commercially sustainable gas utilization projects developed by competent investors.

 

The high point of the launch was the unveiling of the Network Code Electronic Licensing and Administrative System (NCELAS) portal and the supervision of the signing of framework agreements between NGC, Gas Hub, and Dangote Fertilizer Limited by the Minister of State for Petroleum Resources.

 

The NGC will serve as the transporter while Gas Hub and Dangote Fertilizer Limited will serve as the shippers, with the Gas Aggregation Company of Nigeria Limited (GACN) in the role of agent as provided by the framework. The occasion was significant, not just for the NNPC which has added another success to its string of achievements under the Group Managing Director, Mele Kyari, but for Nigeria.

 

As noted by Sylva, the NGTNC would help to grow Nigeria’s gas infrastructure, expand gas utilization, curb gas flaring, and provide codes to standardize the gas value chain in line with global best practices.

 

The NGTNC is an infrastructure project that would ease delivery of gas to domestic markets, improve supply and boost demand.

 

The inauguration of the Network Code was an opportunity to enhance gas delivery and utilization in furtherance of the Federal Government’s objective of transforming gas into a major component of the nation’s energy mix and revenue sources. It is the realization of a reform objective for which the NNPC would be proud.

 

Not just for getting the project off the ground, but for its role in the oil and gas sector. Under Mele Kyari, the corporation has claimed its leadership position in the sector by spearheading industry transforming initiatives in the sector.

 

The Gas Network Code is just another of such laudable initiatives. The NNPC has been at the centre of gas delivery efforts to the domestic market, and through joint venture partnership, instrumental to the currently available gas delivery infrastructure in the country.

 

The inauguration of the Network Code has provided it another opportunity to enhance gas delivery and utilization in the country. As Kyari noted at the event, the project would reposition the gas-powered industry and accelerate economic growth. This is a fundamental goal of the Buhari administration to which all those involved have committed. Kyari restated the group’s commitment thus: “We will continue to give our support to this process to ensure that the full delivery of this process is achieved. We commit to working closely with the DPR to ensure that the target of the government is attained.

 

This opportunity has provided the right framework for the transportation of gas from the source to    the end user in order to get value. We are happy to have this framework on ground and we are ready to collaborate with all our partners, the gas off-takers, gas producers, transportation companies, shippers, and all those involved in the gas value chain.”

 

NNPC’s commitment to boost gas delivery is commendable as this would go a long way in deepening economic development, improve gas supply, boost Liquefied Petroleum Gas supply, and attract more investment opportunities in the nation’s gas value chain. The current proven reserve estimate of the Nigerian gas is said to be about 200 trillion cubit feet, with unproven reserves around 600 trillion cubic feet, according to NNPC data.

 

This is a huge potential for transforming the economy and tremendously boost revenue generation. It is estimated that Nigeria could generate over $1 billion annually. Unfortunately we have been very slow in exploiting this natural resource. DPR revealed in April that Nigeria’s total gas production stood around 1.2bn ft3/d of which 41% was exported and 48% used domestically, leaving 11% to be flared. That figure is said to be the highest level of production since 1963.

 

The domestic gas sector has struggled to capitalize fully on the potential of Nigeria’s sizeable gas reserves, with a significant size of it lost annually to flaring. Nigeria is reputed to be the largest gas flaring country in the world. By not fully harnessing its gas resources, the country loses an estimated $18.2 million daily.

 

Thus, the Flare Gas Regulation 2018 issued by Buhari was meant to activate the sector to generate big-tick projects through NNPC’s partnership with domestic investors. Buhari had set 2020 target for the elimination of gas flaring and the Gas Network Code is an important step towards realizing that objective. It would address the challenges associated with domestic distribution of gas in the country by facilitating more private sector participation.

 

A statement by Dr. Kennie Obateru, NNPC’s Group General Manager, Group Public Affairs Division after the inauguration of the Code, quoted Engr. Saraki Auwalu, the Director of DPR as saying that the Department had emplaced the network code platform and would continue to work with all industry players for the success of the NGTNC.

 

It is this commitment to goals and the desire to turn things around as quickly as possible by those currently at the helm at NNPC and its subsidiaries that has been largely responsible for the positive things now happening in the oil and gas sector.

 

Since the appointment of Kyari and Sylva last year, the industry has received a new lease of life and exploration, exploitation and production haveincreased. New investments have come into the sector thereby boosting revenue and generating employment. A viable and thriving gas industry is critical to the economic growth of Nigeria; this is why the Gas Network Code is an important development for the country.

 

Since the 1980s, there has been an increasing utilization of gas for power generation, industrial heating, fertilizer and petrochemical manufacturing among others. The new project is set to deepen gas usage and expand industrial capacity. In Nigeria, gas utilization is a primary goal of Nigeria’s petroleum and energy policies for obvious reasons, but not least because gas reserves triple the nation’s crude resources.

 

However, utilization has been far below optimum. Consumption level is still the lowest in Sub-Saharan Africa with annual LPG consumption put at 120,000 MT, whereas, in Lagos State alone, there is potential market for over 1,000,000 MT.

 

The NNPC must sustain the momentum it has created and help Buhari deliver on the goal of transforming Nigeria’s oil and gas industry. Kyari and his team must keep inventing new ways of meeting set targets and of making NNPC operations more efficient and more transparent. That is what the industry expects from them and that is what they owe us. Suleiman writes from Abuja

 

 

 

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