The federal government has begun the payment for legacy gas-to-power debts owed to gas suppliers, with $120 million already offset between October 2023 and January 2024.
The Coordinating Director, Nigeria’s Decade of Gas Programme, Ed Ubong, who spoke on the fourth day of the Nigeria International Energy Summit (NIES) on Thursday in Abuja, stated that more importantly, the government is also now working on a framework that can liquidate most of the remaining arrears.
Ubong, a former President of the Nigeria Gas Association (NGA), stated that Nigeria has now returned to its pre-2021 gas production levels, signalling a positive for the industry in Nigeria.
“Today, we have 20 plus projects that can deliver over 4.6 BCF if we all follow through and Nigeria stands a chance of doubling its current gas production of 4.6 BCF a day in the long term, up to 2030.
“This year, based on all that we have seen and working with all the critical stakeholders, we are confident that we can add 20 percent to Nigeria’s current production.
“Additionally, it is worth noting that based on all the work being done by the Honourable Minister of State for gas in January, alone, the LNG supply has moved to the levels that were seen last two years ago. That is significant progress,” he said.
Stressing that Nigeria was not yet out of the woods, he said that a lot of work was going on with the National Security Adviser (NSA) to ensure that resilience is built around supply.
“We will not finish with the conversation without talking about arrears to gas producers and sellers. As of last year, that was about $1.3 billion, depending on how you add up the numbers.
“I am pleased that between October and the end of January, the government has paid $120 million to offset some of that debt. More importantly, the government is also now working on a framework that can liquidate most of that arrear,” he stated.
In his remarks, the Chief Upstream Investment Officer of the Nigerian National Petroleum Company Limited (NNPC), Bala Wunti, who was represented by Dr Justice Derefaka, stated that Nigeria cannot depend on renewables to power its heavy industries.
“We need to put our money where our mouth is. So, again, in this clime, in this part of the world, we have issues around energy poverty, where we have a blooming number across the African continent.
“One key thing I need to mention is that irrespective of the clamour for renewables, (I’m not against renewables), that oil and gas has come to stay and it’s going to be so till about 2050 and beyond.
“Whilst we look at improvement of renewables, it is intermittent, because renewables like we all know cannot drive most of our heavy industries that we have.
“So, again, looking at demand for oil, oil will play a key role. And then secondly, we have natural gas and the good thing in this part of Nigeria, we have about 209 TCF of gas proven, and of course around 600 TCF unproven. So, we are equally capable of meeting our energy demand, but the right environment needs to be in place,” he argued.
Minister of State Petroleum Resources (Gas), Ekperikpe Ekpo, in his comments, stated that the global call for energy transition is a wake up call for Nigeria as a nation with abundant resources.
“If we develop the sector the way it should be, we will be able to meet the local demands, as well as export for revenue generation to the country,” he maintained.
Also speaking, the NGA President and General Counsel and Company Secretary, Nigeria LNG, Akachukwu Nwokedi, argued that huge debts on the books could erode investor confidence in greenfield investments in upstream and on critical infrastructure.
“We therefore recognise that there have been steps to clear the debts and I’m happy to hear that $120 million has already been cleared. But for us in NLNG, it’s not just clearing the debts, it is putting in place policy mechanisms that will prevent reoccurrence,” he added.
Also speaking, Deputy Managing Director, NLNG, Olakunle Osobu, said that global gas demand is expected to reach 5.1 trillion cubic meters by 2035.
“Africa’s real Gross Domestic Product (GDP) is expected to nearly triple from $2.7 trillion in 2021 to $7.1 trillion by 2050. This potential for growth relies heavily on energy to provide the necessary amenities in line with the United Nations Sustainable Development Goals.
“With most of those discoveries located in Sub Saharan Africa, Africa remains a vital part of the global natural gas network with the continent estimated to hold around 10 percent of worldwide proven reserves.
“For the situation analysis, to achieve the projected level of growth in natural gas trade, a huge upstream investment of $9.7 trillion is required by 2050,” he added.
Meanwhile, the NNPC has called for deeper collaboration among upstream operators, especially independent producers, to find solutions to the challenges hindering the effective development of divested assets in the nation’s oil and gas industry.
The company’s Executive Vice President, Upstream, Mrs. Oritsemeyiwa Eyesan, made the call at a panel session at the ongoing 2024 NIES, held in Abuja.
Speaking on the theme: “Innovation, Collaboration, and Resilience: Empowering Independent Producers in the Dynamic Energy Era”, Eyesan stated that past experiences with divestments and how the assets were operated have left much to be desired as most of them experienced a drop in production rather than growth.
“In the industry, if you want to measure success, there are some basic indicators that you utilise – production growth, reserves growth, and asset integrity. If I were to evaluate prior investment initiatives and scale the actors using these indices, I will be untrue to myself if I say everybody has done well.
“Yes, we acquired the assets; but today, we are worse off in terms of production than we were when we did the acquisition”, the EVP lamented.
She, however, acknowledged that there were some success stories in the operations of the independent producers.
She identified some of the challenges to include insecurity, lack of finance, and lack of technological capacity, stressing that with collaboration among industry players, the challenges could be surmounted.
“Collaboration cannot be overemphasised. Somebody said we should be in a state of emergency, and I totally agree with that. It’s not by sitting here and talking about the challenges, I think we should have a war room where we raise the issues and set out concrete plans to resolve them rather than wait for stakeholders individually to take them on,” she added.
Emmanuel Addeh
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