Oando Showcases Upstr Oando Showcases Upstream ... - Oando PLC

Gas & Power
Natural Gas utilisation has
globally been accepted as
the most environment
friendly energy source even though
the level of consumption is still very
low in Nigeria. The choice of natural
gas as the cheapest and best
alternative to liquid fuel became an
issue after the Kyoto Treaty of 1996
as a strategy to reduce pollution of
the environment and global
warming from burning of liquid fuel
especially by automobiles and
generators of manufacturers.
According to a study conducted by
the Nigerian Gas Association
(NGA), the use of natural gas will
enable the user to save 30 per cent
of cost compared with the low pour
fuel oil (LPFO), the cheapest liquid
fuel. However, after over a decade,
Nigerians are yet to come to terms
with the benefits of using natural gas
and this is why the Federal
Government continues to budget
billions of naira annually to subsidise
the consumption of liquid fuel, a
major catalyst of environmental
pollution. For instance, in the first
budget appropriation bill for 2008
submitted to the National Assembly,
President Umaru Yar’Adua had
proposed an expenditure of N400
billion as fuel subsidy but was forced
to raise it to N500 billion during the
final review of the budget when the
prices of crude oil passed the $100
per barrel benchmark in December
2007. Even though the subsidy is
designed mainly for premium motor
spirit (PMS) and kerosene, the
plans by the government to include
subsidy of diesel under the
petroleum support fund (PSF) in
response to protests by the National
Union of Petroleum and Natural Gas
(Nupeng ) and National Association
of Road Transport Owners (Narto)
is likely to exceed N1 trillion
according to the estimate of Mr.
Odein Ajumogobia, minister of state
for Energy (Petroleum). Also in a
survey conducted recently by The
Economy, it was estimated that
Nigerian banks spent N54.3 billion
on the utilization of diesel for
generating electricity in 2007. In
Nigeria today, several companies
are relocating their plants from
Nigeria to neigbouring countries in
Natural Natural Gas Gas as as Alter Alternative Alter native Fuel
Fuel
order to take advantage of the
cheaper source of energy since
power supply in Nigeria is not
reliable and cost of using diesel has
wiped off their profits.
A A better better envir envir environment
envir environment
onment
In addition to the perceived
economic benefits of using natural
gas, the real gains may be
environmental. The study
conducted by the West African Gas
Pipelines (WAGPP) concluded that
greenhouse gas emissions in
Nigeria would fall by 78 million tones
(T) over a twenty-year period as gas
flaring is reduced. In this case,
unrests in the Niger Delta will also
become a thing of the past by the
time oil firms operating in the region
put their natural gas into economic
use whereby jobs would be created
for the unemployed youths and
farmers can get produce from their
farmlands when rays of fire from
flaring stopped. Nigerian now burns
off about 2 billion cubic feet (bcf) of
gas per day, which constitutes
roughly 75 per cent of the country’s
total gas output, and is a major
source of carbon dioxide and
methane emissions in the region.
Nigeria has an estimated 182 trillion
cubic feet (tcf) of proven natural gas
reserves, the tenth largest in the
world.
Gover Government’
Gover Gover nment’ nment’s nment’ s support
support
The creation of a gas ministry by
the present administration is aimed
at giving due attention to the
utilization of natural gas in the
country and elimination of flaring by
oil companies. However, efforts
should be put in place to have laws
that will make it mandatory for
industries to use natural gas. Also
direct investment should be made
by the government to improve gas
infrastructure so that natural gas can
easily be transported from the fields
to city centres where demand
requirement is very high. lot of
investment opportunities abound in
the natural gas sector of the Nigerian
petroleum industry. Increasing
attention is now being given to this
vital sector. Government’s
aspirations for the gas sector
include creating new industries out
of the old oil industry; capturing
economic value and generating as
much revenue from gas as from oil
by 2010. Others are developing the
domestic gas market and, ending
gas flaring by 2008.
Conclusion
Conclusion
Remarkable progress has been
recorded towards the realization of
these objectives. Of the current
annual gas production of about
2,000 bscf, about 40% is flared. This
is a drastic drop from the 70 per
cent proportion flared before the
advent of this administration. The
hitherto flared gas is being
channeled into gas powered
projects for rapid utilization and
monetization with a view to
maximizing value addition to the
nation’s natural gas resource by
2010.
Domestic gas consumption is
expanding as a result of the
ongoing power sector reforms while
gas export which was non-existent
prior to 1999, has received a strong
boost.
As a result of various projects
established, total gas utilized in the
country increased from about 197
million standard cubic feet per day
Ongoing pipe laying construction in Apapa, Lagos
mmscf/d in 1999 to about 573
mmscf/d in 2004. Substantial
demand growth is expected in this
decade.
In order to achieve the Federal
Government’s aspiration of earning
the same level of income from gas
as in oil by 2010, subsidy of PMS
and kerosene should be suspended
and plans to bring diesel under PSF
should be put on hold. This is
because beneficiaries of subsidy are
not the low income earners but the
rich. Instead, the annual budget on
fuel subsidy should be directed at
developing infrastructure that will
improve access to natural gas which
will therefore encourage the
establishment of industries and
generation of employment in the
country. Consequently, domestic
demand for natural gas in Nigeria will
increase to about 1700mmscf/d by
2010.
Senator Osita Izunaso, chairman,
Senate Committee on Gas said the
need to reposition the Nigerian gas
sub-sector informed the initiation of
reforms by the Federal Government.
He said the Senate is expecting the
bill that would give legal backing to
this reforms so that , it is when we
receive the bill that we can then talk
of gas act and we are looking forward
to it.
Excerpts from Financial Standard
95 OandoNews