Nigerian Gas Sector Watch Volume 2
Nigerian Gas Sector Watch Volume 2 | October 2020
This publication provides information on developments in the Nigerian Gas Sector space during the two quarters ended September 2020. It also features a review of the Framework for the National Gas Expansion Programme which was released by the Central Bank of Nigeria (CBN) on 4 September 2020. We hope you find the information and insights in the publication useful.
The Federal Government of Nigeria (FGN) declared 2020 as the year of gas. Following the declaration, the FGN has continued to make concerted efforts through the Ministry of Petroleum Resources (MoPR), Ministry of Finance and the CBN to improve its commitment towards significant flared gas reduction and driving gas utilization for domestic and industrial usage. Below are some of the useful information and status of the various initiatives around gas, being pursued by the government.
1. Nigeria's Proven Gas Reserves
According to the Department of Petroleum Resources (DPR), the country’s proven gas reserves has increased by 0.57% from 202tcf recorded in January 2019 to 203.16tcf as at June 2020. This pronouncement by the DPR puts to rest the controversies around the figures being put out in the public space by stakeholders in the industry. The DPR is also set to achieve a proven reserves target of 210tcf by 2025 and 220tcf by 2030. The above figures only serve to validate Nigeria as a gas province with some oil reserves. Nonetheless, the FGN should continue to drive the implementation of the various policies that are geared towards revitalizing the gas sub-sector, to enable the country benefit from the monetization of this vast resource.
2. Nigeria Gas Transportation Network Code (NGTNC) – Go Live
Following the launch of the NGTNC to deepen the growth of domestic gas market which became effective in February 2020, the FGN virtually flagged off the operationalization of the NGTNC in August 2020. This was in line with the FGN’s 2020 strategy to drive key policies and regulatory initiatives that would enhance gas reserves growth to support domestic and export projects. The Minister of State for Petroleum Resources (the Minister) highlighted during the virtual Go - Live that the implementation of the NGTNC and other related interventions by the FGN (i.e. National Gas Expansion Programme (NGEP) and the Nigerian Gas Flare Commercialisation Programme (NGFCP)) would lead to improved gas supply to power, growth of gas-based industries, domestic Liquified Natural Gas, Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG) penetration, to enhance Government’s revenue from the gas sub-sector.
One of the objectives of the NGTNC is to unleash the potentials of accelerated growth to stimulate investment opportunities and national economic development. Thus, for ease of operationalization of the NGTNC, the DPR has established a Network Code Electronic Licensing and Administration System (NCELAS) portal to process all licenses required for operating gas transportation arrangements and administration of all regulatory roles, required for the optimal performance of the Network Code. The DPR has also commenced the issuance of license to gas transporters, shippers and agents, via the network code, and the migration of existing gas transportation agreements into the network code regime has begun1.
Despite the challenges posed by the COVID-19 Pandemic, the traction achieved by the FGN in implementing some of the policies introduced for the sector in 2020 (dubbed as the “year of gas”), has made stakeholders become more optimistic that the FGN is dedicated to stimulating the necessary investments in the sub-sector.
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