Gas: Nigeria to achieve 400% utilization increase by 2015

On May 5, 2011 · ·

By Yemie Adeoye, reporting from Houston, Texas
THE current domestic gas utilization level of 1 billion standard cubic feet (scf) would achieve a 400 percent increase by 2015 as the federal government has concluded plans to boost in-country utilisation by another 4 billion scf of gas over the next 4 years.
This ambitious but achievable aspiration was disclosed to a large gathering of Nigerian and foreign investors as well as stakeholders in the oil and gas sector by the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke during the investment forum organized by the Petroleum Technology Association of Nigeria (PETAN) in collaboration with the Association of Nigeria Petroleum Professionals Abroad (ANPPA) at the ongoing Offshore Technology Conference (OTC) in Houston, Texas, USA.
This is coming on the heels of the Minister’s call for more investments in the oil sector just as she noted that the sector experiences an average annual natural production decline rate of about 8 – 12 percent. “In essence, in order to maintain the current production level of about two million barrels per day (mmbbl/d), the sector would need to find additional oil and gas reserves. Hence the oil and gas sector collectively offer an unparalleled opportunity for investment”.
According to her the domestic gas growth rate is forecast to be the world’s most aggressive growth in gas and it is beginning to stimulate an unparalleled level of investment activity in Nigeria, and this can only be compared to what was seen in the early oil boom days of the 70s. She further noted that the aspiration is in line with government’s drive to make Nigeria the hub of Africa’s oil and gas industry and to make gas lead the industrialization initiative and earn more money than oil for the country.
To achieve the target, the minister said government recently began to dedicate an annual spend of between $1.5 billion to $2 billion to upstream gas production for the domestic market alone, an investment level no other sector in the Nigerian economy enjoys.
She also said that although government focuses on gas development, it also mindful of improving and sustaining oil production considering the fact that oil production level declines between eight and 12 percent annually.
She said: “Our oil production runs at over two million barrels per day and we currently produce over eight billion cubic feet of gas per day.  As you know, we are a major Liquefied Natural Gas (LNG) exporter, exporting at this time over three billion cubic feet of gas per day in the form of LNG and very recently commenced export of natural gas through the West African Gas Pipeline to the Economic Community of West African States (ECOWAS) sub-region.
“But perhaps most interesting is our recent focus on the domestic gas sector for which we are driving an unprecedented growth in gas utilization from the current one billion cubic feet per day to about five billion cubic feet per day by 2015. This growth rate is forecast to be the world’s most aggressive growth in gas and it is beginning to stimulate an unparalleled level of investment activity in Nigeria, seen only in the early oil boom days of the 70s.
“Putting all these in an investment perspective, to sustain the current scale of activities in the sector and simultaneously fund the expected growth for the next few years, the industry needs to spend about $20 billion annually.
Recently, upstream gas production for the domestic market alone, has been receiving a dedicated spend of between $1.5 billion to $2 billion annually from the Federal Government of Nigeria. No other sector in the Nigerian economy draws this level of investment activity.
“Whilst our focus for growth is centered on natural gas, it is essential to know that the oil sector experiences an average annual natural production decline rate of about 8 – 12 percent. In essence, in order to maintain the current production level of about two million barrels per day (mmbbl/d), the sector would need to find additional oil and gas reserves. In essence, the oil and gas sector collectively offer an unparalleled opportunity for investment.
“The challenge therefore is for Government to create the enabling environment that allows the retention of inward flows of capital for corresponding economic growth and development. Before I delve into the specific investment opportunities, let me quickly share with you the specific steps we have taken in the oil and gas sector to create that enabling environment.”
She highlighted President Goodluck Jonathan’s three major investment programmes including development of a petrochemical complex by NNPC and its partner, the Saudi Arabian conglomerate – Xenel, a project estimated to cost about $6 billion, building of fertilizer plants in partnership with the Indian conglomerate – Nagarjuna, estimated to cost about $4 billion and  gas central processing facility which is expected to be built by a consortium led by Agip in partnership with NNPC and Oando.

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