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Author Topic: Expert Seeks Designation of 20% of Nigeria’s Gas as Public Good  (Read 655 times)

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Expert Seeks Designation of 20% of Nigeria’s Gas as Public Good
« on: September 30, 2014, 03:55:39 PM »

An energy expert, Mr. Dan Kunle has said that Nigeria can overcome its constant challenges of gas supply to its electricity market and other sectors of the local economy by designating 20 per cent of its total gas production and reserves as a public good.

He also noted that such designation should be followed with placing a political price on the 20 per cent gas production which will be assigned to feed the country’s local economy, notably the electricity market and key industries in the country.

Kunle told THISDAY in Abuja that Nigeria cannot develop her local economy by adopting the international price of gas for her domestic economy, hence, the need for the government to exert some political will on gas production in the country.

According to him, with such political pricing for the 20 per cent of Nigeria’s share of gas produced from her joint venture engagements, investors in electricity generation, steel, and agriculture will find the country much more attractive to invest monies.

Kunle thus explained that the lack of specific laws guiding gas production and perhaps supply to the domestic economy of the country would continue to provide the legal leeway for international oil companies to balk on pledges made on gas supply to vital sectors of the local economy.

He noted that Nigeria with its comparative advantage in gas, should seek to achieve competitive advantage in same.

According to him, without a competitive advantage which the 20 per cent gas designation framework could bring, international oil companies will continue to push for higher gas price as the only basis to commit to the development of the country’s gas resources.

“There is no specific law that addresses gas exploration and production and so we need an executive window from the presidency to work hand-in-hand with the oil companies in Nigeria. Those windows are there; the Associated Gas Framework Agreement (AGFA) was created for such purposes and Shell, Agip have taken advantage of that to build power plants as well as Mobil, Chevron and Total that are in the process of building power plants around the country,” Kunle said.

He further noted that: “The enforcement we need now to flow from the presidency and concerned entities is to realign and modify such window since the Petroleum Industry Bill is not yet in place to open up the entire oil and gas sector properly under a new framework but because we have not gotten that done, it means we have to work within the existing law and use such executive window to advance gas production.

If they have to give say 20 per cent of the gas produced daily to the Nigerian domestic economy at a political price, then they will know that they can sell the remaining 80 per cent at commercial price.”

We have a plant at Bonny which is doing 22 metric million tonnes a year; unfortunately, we are taking that to the international arena because we want to make money on the premise that that price is good.

We are not taking our natural gas to the domestic market and so we are currently selling what we own 49 percent of to the international market to sell. That political will that made us create the 22 metric million tonnes venture in Bonny should also be used to create such fortune for our domestic market,” he said.

Adewale Odubiyi
Owner, Nigeria Oil & Gas Forum

Nigeria Oil & Gas Forum


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