Friday, October 31, 2014 8:40 AM / FBN Capital Research
The FGN can report progress on its dual objectives for the gas segment of increasing domestic utilisation and reducing flaring. The ongoing power reforms have helped to boost the appetite for gas as a major feedstock.
According to industry sources, the FGN and the private sector have together invested around US$3bn in the segment annually over the past six years. The industry’s infrastructure has been the principal destination of this investment.
As for flaring, OPEC statistics put flaring in Nigeria as a proportion of total gas production at 15% in 2013, compared with 23% in 2009. Nigeria therefore stands above the OPEC average (5%) yet compares favourably with several other members such as Angola (64%), Iraq (58%) and Ecuador (36%).
The FGN’s priority for gas has shifted to domestic utilisation from liquefaction and export. This is evident from the proposed increase in the price paid to domestic suppliers from US$1.50/mscf to US$2.50 excluding transport costs of US$0.80.
Indigenous companies are investing in new gas capacity. Seplat, for example, plans to increase its gas delivery capacity from 120mmscf/d to over 400mmscf/d over the next three years.
Sources: OPEC, FBN Capital Research
The NNPC insists that the national integrated power projects (NIPPs) in the eastern Niger Delta will receive their gas requirements in full within four months, and those in the western delta by mid-2015 as result of the building of the necessary pipelines and associate infrastructure. For the privatised ex-PHCN companies, it has a timeline of the end of Q3 2015.
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