The New Gas Reality

Proshare

Friday, March 05, 2021   /05:00 AM / By Proshare Research/ Header Image Credit: EcoGraphics


Proshare Nigeria Pvt. Ltd.



 

Introduction - The New Gas Reality

With COVID-19 presenting a great cover story to avoid facing the pre-existing issue of cleaner global energy production and greener use of the environment with lower levels of industrial waste and higher rates of recycling, the journey of gas as an energy source has moved from backroom gossip to boardroom slide decks. The new pivot towards cleaner energy opens unexpected opportunities for Nigeria's fledgling gas market.

 

Nigeria produces both associated and non-associated gas with a reserve estimated at 202trn standard cubic feet (Tcf) of gas in the ground. Oil and gas analysts project that the country has an extra 650Tcf to 700Tcf of unaccounted gas reserves because of the low base of gas exploration activities in the country, with most associated gas (AG) produced by the oil majors being flared off. However, gas flaring has been reduced from over 65% of production in the late 1990s to less than 20% in more recent sector audits.

 

Nigeria is ranked ninth in the size of proven global gas reserves. The current size of the nation's gas reserves is expected to last the country at present rates of production and consumption for another 60 years.

 

Between 1999 and 2019 the Nigerian Liquified Natural Gas (NLNG) Company converted 193.6Bcm (billion standard cubic metres) or 6.84Tcf (trillion cubic feet) of AG to export products showing the rising importance of gas as an export earner and an export earnings risk diversification strategy. As the world goes green with the environment becoming more of a business concern to C-suite executives across the globe, Nigerian boardrooms will also have to address the matter of increasing the proportion of gas use relative to coal and sundry 'white' oils. The rise of the environmental, social, and governance (ESG) framework as part of the boardroom planning process indicates a post-COVID-19 reality that centres on more balanced approaches to business expansion. While profitability will remain an important part of the enterprise puzzle it will not be the only piece that will create the corporate picture of the future.

 

The world of gas will grow exponentially as commercial and private vehicles shift from premium motor spirit (PMS) or automotive gas oil (AGO) to compressed natural gas (CNG) to power their engines as families move from dual-purpose kerosene (DPK) to liquified petroleum gas (LPG) to cook daily meals. The new world of gas would be cleaner, cheaper, and more sustainable as fossil fuel gradually but predictably loses energy market share.

 

In its report on the oil and gas sector in 2020, Proshare's Confidential Report on the sector noted on page 76 that "The notion that the oil industry will suddenly disappear is wrong, but so also is the belief that oil-producing countries have time to scrape by as the world pivots to new energy sources. The reality would seem to lie somewhere between both outcomes.

 

Oil and gas companies will need to change their business models with less dependence on revenues from oil over the next decade while they also would need to ramp up their development of gas and its various uses in both industrial and domestic settings. With companies increasingly concerned about environmental, social, and governance (ESG) matters, the business environment will sashay towards friendlier environmental and social practices with higher emphasis placed on corporate governance and its consistent attention to best corporate practices" (see Illustration 1 below).


 

Illustration 1: A Time of Transition

Proshare Nigeria Pvt. Ltd.


 

The Proshare Report further observed on page 77 that "Forward-facing technology will require forward-facing management, the key managerial imperatives in 2021 in the O&G sector will be imagination, strategy, and rethinking. The O&G models of the past will have to be unlearned; the present realities will require new approaches to be learned while the future would need managerial relearning. The big industry agendas of 2021 will gravitate around the energy needs of a climate-sensitive ecosystem that disavow the clunky smokestack factories of the past.

 

The new business mindset would need to address the cost efficiencies that would make cleaner manufacturing and power generation practical and affordable. Therefore, O&G firms will have to drive operational models that cut costs, reduce time to market, and integrate horizontal and vertical value chains to deliver goods in a cheaper, cleaner, and safer manner.  This is not impossible, but it is a massive request to ask from companies that are not familiar with such levels of technological innovativeness, operational efficiency, and cost-effectiveness" (see Illustration 2 below).


 

Illustration 2: Reimaging Oil, Gas, and Technology

Proshare Nigeria Pvt. Ltd.


Deriving from emerging issues with the industry's major oversight bodies such as the department of petroleum resources (DPR), the Petroleum Product Pricing and Regulatory Agency (PPPRA), and National Petroleum Investment Management Services (NAPIMS), the managers of these agencies must buy into a new forward-thinking mindset devoid of old biases and ancient loyalties. The template for this new thinking might be seen in the local cooking gas (LPG) market.



Proshare Nigeria Pvt. Ltd.


 

Downloadable Version of Memo to the Market: PPPRA and the Nigerian Gas Market, Avoiding a Robinhood

1.   Full Report: Memo to the Market: PPPRA and the Nigerian Gas Market, Avoiding a Robinhood - Mar 02, 2021


Proshare Nigeria Pvt. Ltd.


Related News

1.      PPPRA and the Nigerian Gas Market: Avoiding a Robinhood


Proshare Nigeria Pvt. Ltd.


Related Link

1.      NLPGA v PPPRA - An Originating Summons in the Federal High Court of Nigeria Holden at Lagos  - Jan, 2021


Proshare Nigeria Pvt. Ltd.


Related Videos

1.      Why Full Deregulation is Vital for Nigeria's Oil and Gas Sector

2.     Privatization of NNPC Refineries, Will Attract More Investments into the Oil and Gas Industry - Tominiyi Owolabi

3.     Decades of Nigeria's Oil and Gas Sector: Way Forward

4.     Why Gas Should be Leveraged as A Pivot for Diversifying Nigeria's Revenue - Bambo Ibidapo-Obe

5.     How Oil and Gas Zones can Support Nigeria's Economic Growth


Proshare Nigeria Pvt. Ltd.


Related News - PMS Pricing

1.      Subsidy Removal and Cost-Reflective Tariff: Tough Decisions to be Made

2.     Possible Increase in PMS Price, Stakeholders Call for Fixing of the Non-Functional Refineries

3.     Uncertainty Over PMS Price - A Clear Indication Inflation Concerns Could Linger

4.     Commencement of Dangote Refinery's Production Would Improve Nigeria's Current Account Balance

5.     FG Inaugurates Technical Committee On PMS Pricing Framework

6.     FG: Dangote Refinery Will Sell Petrol at International Price

7.     Is PMS Price Deregulation for Real or a Mirage?

8.     NLC Communicates the Decision of Its CWC on Hike in PMS Pump Price and Electricity Tariff

9.     PPMC Increases Ex-depot Price of PMS to N151.56 per Litre

10.  Policy Directions on PMS, Tariff Hike, Gas and Stamp Duties and Implications on Households

11.   PPPRA Releases Advised Price for PMS for the Month of July 2020; Raises Pump Price to N140

12.  PPPRA Removes Existing PMS Price Cap; Commences Market Based Pricing Regime

13.  The Conundrum in the Retail Pricing of PMS

14.  Petrol: An End to the Subsidy Regime?

15.  The Deregulation Farce; What's The Way Forward?

 


Proshare Nigeria Pvt. Ltd.


Related News - Previous Oilprice Intelligence Report 

1.      Brent Crude Holds Gains Above $65 - OIR 230221

2.     Brent Crude Oil Price Falls Back Below $64 - OIR 190221

3.     How Much Higher Can Oil Prices Go? - OIR 120221

4.     Bullish Sentiment Takes Over Oil Markets - OIR 090221

5.     Brent Crude Surges Towards $60 - OIR 050221

6.     Oil Prices Hit 1-Year High - OIR 020221

7.     Oil Prices Hit 1-Year High - OIR 020221

8.     New Vaccine Hopes Boost Oil Prices - OIR 260121

9.     Oil Price Rally Paused By Chinese COVID Concerns - OIR 260121

10.  Energy Shares Plunge as Oil Rally Halts - OIR 220121

11.   Oil Demand Fears Continue to Weigh on Markets - OIR 190121

 

Proshare Nigeria Pvt. Ltd.



CMOs/Reports on Oil and Gas Sector

1.      Oil and Gas: Working the New Normal in the Time of a Pandemic

2.     The Nigerian Oil and Gas Industry Update: Urgent Need for Reforms

3.     Oil and Gas Update: Downstream Oil and Gas at a Crossroads

4.     Nigerian Oil and Gas Industry Update

5.     Oil and Gas Sector Records 1 Gainer to 7 Losers; Index Dipped By -19.83% YTD

6.     NCM2020 (20) - Oil and Gas Sector - SEPLAT Tops On EPS and PAT Margin As Mobil Tops on ROE

7.     Nigerian Oil And Gas Sector- Q3 2019 Earnings Preview

8.     The Oil Market, 2020 Black Swan, and A Third Virus Wave 


Proshare Nigeria Pvt. Ltd.


Related News on Oil and Gas Companies Latest Results

1.      CONOIL Declares N1.1bn PAT in Q3 2020 Results, (SP:N19.05k)

2.     JAPAULOIL Declares N91m PAT in Q3 2020 Result, (SP:N1.11k)

3.     ETERNA Declares N194m PAT in Q3 2020 Unaudited Results, (SP:N5.00K)

4.     Ardova Plc Declares N1.9bn PAT in Q3 2020 Result, (SP:N12.65k)

5.     SEPLAT Declares N33.7bn Loss in Q3 2020 Results, Proposes $0.05 Interim Dividend; (SP:N420.00k)

6.     MRS Declares N881m Loss in Q3 2020 Results, (SP:N12.45k)

7.     TOTAL Declares N500m PAT in Q3 2020 Results, (SP:N112.20k)

8.     RAKUNITY declares N37m Loss in Q3 2020 Unaudited Results, (SP:N0.50k)

9.     OANDO Notifies of Delay in the Publication of its Q3 2020 Financials

10.  OANDO Declares N13.06bn PAT in Q3 2019 Results (SP:N3.40k)

 

Proshare Nigeria Pvt. Ltd.


Related News on PIB

1.      NNRC Encourages NASS to Prioritize The PIB

2.     Inside Nigeria's 2020 Petroleum Industry Bill

3.       PIB Will Ensure Nigerians Benefit Optimally from Oil and Gas Resources - Ahmed Lawan

4.     PIB: Will the Jinx be Broken This Time Around?

5.     Petroleum Industry Bill - Is There Light At The End of The Tunnel?

6.     Nigeria to Draft Petroleum Industry Bill from Scratch

7.     FG Explains Why Presidential Assent Was Withheld For Petroleum Industry Governance Bill

8.     House of Representatives Passes Petroleum Industry Governance Bill

9.     Senate Passed Petroleum Industry Governance Bill

10.  Analysing the Petroleum Industry Bill

11.   Petroleum Industry Bill - Senate To Receive Final Report on PIGB April 25

12.  Bukola Saraki's Remarks at Petroleum Industry Bill Public Hearing

13.  The New Petroleum Industry Bill and Taxation of Petroleum Products in Nigeria

14.  FG may effect changes in Petroleum Industry Bill

15.  PIB Will Be An Enabler For Increased Investments In The Oil and Gas Sector - Bambo Ibidapo-Obe

16.  Power Sector: How PIB/Deregulation considerations dampens interest in mini refineries


 

Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.



Proshare Nigeria Pvt. Ltd.

READ MORE:
Related News
SCROLL TO TOP