How to address challenges in Nigeria’s gas sector

Ekperikpe Ekpo, Minister of State for Petroleum Resources (Gas), on Tuesday, said the expansion of Nigeria’s gas infrastructure network is required to stimulate investment and create new opportunities for economic growth and diversification.

Mr Ekpo disclosed this while speaking at a sectoral retreat on ministerial deliverables 2023-2027 held in Abuja on Tuesday.

“I am compelled to emphasise that Nigeria, endowed with over 208Tcf in proven gas reserves, should not be grappling with energy poverty. It is imperative for us collectively to confront these challenges head-on,” Mr Ekpo said.

He said in alignment with the overarching goal of fostering high performance and accountability within the government, President Bola Tinubu has issued the Presidential Priorities and Ministerial Deliverables for 2023 – 2027.

“This initiative seeks to establish a robust performance-tracking mechanism for the Minister of Petroleum Resources and the pertinent agencies under his purview.

“(It) underscores the importance of collaboration and cooperation in addressing the challenges and seizing the opportunities that lie ahead. In an era marked by rapid technological advancements, evolving market dynamics, and growing global consciousness towards sustainable practices, we must work together to navigate these complexities and chart a course towards sustainable development and prosperity,” he said.

He explained that one of the key elements in the transition towards a more sustainable energy future lies in the strategic utilisation of natural gas.

“As we stand at the crossroads of energy evolution, gas emerges as a vital transition fuel that holds the potential to bridge the gap between traditional fossil fuels and renewable sources of energy.

“In our pursuit of a low-carbon economy, gas often referred to as the “cleanest” fossil fuel, offers a number of noteworthy benefits. Its burning emits a great deal less greenhouse gas than that of coal and oil, which makes it a desirable choice for lowering carbon emissions and slowing down global warming.”

Furthermore, he said gas-fired power plants are incredibly adaptable and can be quickly ramped up or down to account for variations in the production of renewable energy, offering a dependable backup for intermittent sources like solar and wind power.

Mr Ekpo said Nigeria must prioritise infrastructure development to support the exploration, production, processing, and distribution of gas.

This, he said, includes investments in gas pipelines, liquefied natural gas (LNG) facilities, and gas processing plants to ensure efficient transportation and monetisation of the country’s gas resources.

“By expanding our gas infrastructure network, we can enhance access to gas markets, stimulate investment in upstream exploration and production activities, and create new opportunities for economic growth and diversification,” he said.

Furthermore, the minister said ensuring the widespread penetration of gas nationwide is essential to realising its full potential as a transition fuel.

“This entails not only increasing domestic gas production but also promoting the adoption of gas as a cleaner alternative for power generation, industrial processes, transportation, and household use.

“Initiatives such as the “Decade of Gas Initiative” are instrumental in driving gas utilisation across various sectors through targeted interventions, infrastructure development, and policy incentives,” he added.

Ease of Doing Business

He noted that to promote ease of doing business and to stimulate the discovery and development of the country’s abundant hydrocarbon resource, President Tinubu issued an executive order for the Ministry of Petroleum Resources.

He explained that the executive order sought to shorten the procedure for getting approval for contracts to which companies in the petroleum sector and companies controlled by the federal government are parties.

“Raising the contract approval thresholds in Production Sharing Contracts (PSA) or Joint Operating Agreement (JOA) to not less than ten million $10,000,000 to account for the rate of inflation, raising the duration for third party contracts from three to five years, with the option of renewal for an additional two years; and giving effect to and reinforcing the provisions of the Business Facilitation (Miscellaneous Provisions) Act, 2022 and enhance the ease of doing business within the petroleum sector,” he said.

In his address, the Minister of State Petroleum Resources (Oil), Heineken Lokpobiri, said Nigeria’s petroleum sector had the solutions to the country’s problems in the short term given that 90 per cent of Nigeria’s foreign exchange earnings are from the sector.

Mr Lokpobiri added that the retreat was convened with a view to having discussions and conversations on how to achieve the targets and mandates set for the Ministry of Petroleum Resources by Mr Tinubu at the Ministerial retreat held in November 2023.

“The first target is to see how we can ramp up production. If we ramp up production, we will be able to meet our targets in terms of an increase in revenue and our obligations in the midstream and downstream.

“As part of our efforts to see how we can ramp up production, we are working closely with the Nigerian National Petroleum Company Limited (NNPC Ltd), the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and with other Agencies.

“We are tackling the issue of insecurity, and pipeline vandalisation to see how we can attract investment on a sustainable basis, not just at the upstream but also in the midstream and downstream.

“It is also our obligation to see how we can create the best environment for investments to come in and to ensure that our fiscal regulatory framework is globally competitive,” he said.