Operators in the
oil and gas sector have listed steps that must be taken for the ‘gas
revolution’ project launched by the federal government to make any
meaningful impact. They said the atmosphere for the smooth sail of the
project cannot be laid in the little time the government has left.
President Goodluck
Jonathan had last week launched the project which he said will result
in foreign direct investment of about N410 billion over the next three
years.
According to him,
the full implementation of the entire gas master-plan agenda will
result in about $25 billion worth of investments in gas processing,
transmission, and downstream gas utilisation projects.
Following the
launch, some local companies like Oando have been selected to build
central gas-processing facilities at an estimated cost of beteween $2 –
$3 billion.
However, Dragan
Trajkov, oil and gas sector specialist at Renaissance Capital, an
investment bank, said “While we think it is almost impossible for
anyone to build a $3 billion project by the end of 2012, we understand
that the numbers might be presented optimistically in the light of the
ongoing presidential campaign,” he said in a report published this week.
A few observers
dismissed the launch of the project at the middle of electioneering
campaigns as just another political stunt by the government.
Not so bleak
Despite the
illusions of the revolution, some industry watchers say the
‘revolution’, if well executed, would help stop gas flaring and develop
the nation’s domestic gas market.
“The gas revolution
launched by President Goodluck Jonathan holds the promise of inducing
further development and growth of Nigeria’s domestic gas market,” Fola
Onasanya, oil and gas expert at Ciuci, a consultancy firm, said.
“With the $3
billion Central Gas Processing Facility (CPF) by Nigerian Agip Oil
Company (NAOC) and Oando Nigeria Plc, a huge sink will be created for
storing and utilising natural gas resources which otherwise could have
been flared, thus providing a boost to the economy both in terms of
value generation and job creation,” Mr. Onasanya said.
According to him,
so also will the Memorandum of Understanding (MoU) with Saudi Arabia’s
Xenel Industries Limited to construct a proposed 1.3 million tonnes/p.a
Petrochemical Plant in Warri, Delta State, along with five fertiliser
blending factories by Nagarjuna and Chevron.
“However, for these
moves to deliver their optimal gains and attract foreign investments,
key areas articulated in the Gas Master Plan need to be addressed by
strategic decisions and actions of the government,” Mr. Onasanya
further said.
Mr. Onasanya said
these include the issues relating to the gas pricing policy – which
provides a framework for the minimum price that any purchaser of gas
can be charged.
“This needs to be
tackled in the fair interest of all stakeholders (including the IOCs),
the Domestic Reserves Obligation – which aims to ensure the
availability of gas for domestic consumption in order to stimulate
economic growth – needs to be actualised and the Gas Infrastructure
Blueprint – which provides for the establishment of a network of gas
hubs which would ultimately reduce the cost of supplying gas – should
be implemented in full gear,” he said.
“Overall, the ‘Gas revolution’ is not over-ambitious, provided the government follows through with strategic actions,” he added.
However, a top
official of one of the major oil companies operating in the country,
who would not want to be quoted because he was not authorised to speak,
described the project as rather “ambitious”, adding, “It is a huge
project that would require huge foreign investment because it is
obvious that the government would not be able to do this alone.”
According to him,
there would be need for billions of dollars to cater for professionals
and the investment would be required for the plants that would be
required to carry out the processing and transmission of the gas. This,
he observed, cannot be done in a short term.
Nigeria’s oil
assets have been exploited for more than 50 years. However, while oil
companies have profited from the resource, local communities in the oil
rich but conflict struck areas live with the daily pollution caused by
non-stop gas flaring.
The country has
lost billions of naira on gas flaring, a process of burning off into
the atmosphere, surplus combustible vapours from an oil well, either as
a means of disposal or as a security measure to relieve well pressure.
Inability to solve
the lingering problem has been increasingly recognised as a huge
environmental problem in the Niger Delta region of the nation.
