Federal Government’s effort at accelerating gas production for domestic power generation yesterday witnessed another set-back with most of the investors expressing disappointment at the purported non-cooperative attitude of the Shell Petroleum Development Company and other major oil companies in not allowing them access to gas fields within their areas of operation.
According to statistics, the country presently has about 189 gas sites and out of this number, 182 are within the oil fields operated by major oil firms with Shell alone having 95.
The Executive Chairman, Petrolog Group, Vincent Ebuh, who spoke at a meeting with the Minister of Petroleum, Dr. Rilwanu Lukeman, in Abuja, bemoaned the lack of cooperation from the international oil companies which were not allowing the gas investors access to the gas fields. “We identified about 24 fields but we were only allowed access to four which has only 1m gas. We are having a big road block from the IOCs, wondering why you are in my backyard.
Shell, Most of the flares that were identified, you go there they say no go area, already engaged, they are going to utilise for something in the nearest future and that future we have seen it in many years has not materialised where we want to be as nation“.“In a situation like this, government wants something and how they go about getting it.We identified 21 fields, we were given four and when we run our economics, in the third or fourth year, the gas in this particular four fields will amount to 1mscuf. How can anybody from the bank or abroad bring money to invest money in 1mscuf,” he said.
Ebuh called on federal government to prevail on the Joint Venture oil companies cooperate with the gas investing firms to accelerate the process of production which is of strategic importance to the country’s economy. On December 24 last year, federal government entered into an memorandum of understanding with various companies interested in developing the gas sector with the intention of reaching final production agreement latest by March this year. However, this target date appears to be under threat, so said the participating firm yesterday.
IOCs sitting on some of these gas will cooperate with us and ensure that they come up.The idea is that as soon as possible, these projects will be in a position to supply gas to the system and help alleviate some of the challenges that we are having now in the power sector.
Also the Chief Executive, Turan Oil, Chris Akerele, expressed a similar view saying the attitude shown by the oil companies has tended to delay the process of executing the MoU on gas production.“We had hopes to cooperate with Shell, we spent a few hours with them, called them weeks later, was told that Shell had no interest in the project. Two of the assets were no go areas, also said they were in touch with NAPIMS and they had no interest in our project and as a result, no further basis for discussions.
In subsequent attempts to contact Shell, we were not even given the courtesy of replying. We wish that some IOCs who sit on this gas will go along with the desire and request. We had had no joy at all“, he .The Executive Director, Business Development, COLECHURCH LTD.
Mr. Terence Modebe, says records shows that Nigeria has 189 flares and 182 are with IOCs and the rest with smaller companies.“We went for 31 of these flare sites. Based on the initial due diligence that was done by DPR and they confirmed that the flares sites were uncommitted. In the process, we then signed a MoU with the ministry for 31 sites. Based on that we went to the market and raised $1bn based on the 31 sites which we had informed our partners that we are going to do in Nigeria. Today, we are not even half way there. Chevron, Total and Continental or their support in achieving the target“.
He said the projects are not contrary to the master plan, but is complimentary. “ It is looking for associated gas, flares that need to be extinguished to help the country achieve its objectives. We want to find a way to get these 31 sites or the finance that has been raised will be at risk. We are almost dealing with all the IOCs, we are not making the kind of process we need to make“, he said.
The President, Remington International Resources, EJ Mattern in his own report said there ha s been very little definitive progress.“We are willing to progress on these projects, we have financing, but because of the foot dragging, it is becoming difficult to hand in there, it is really unfortunate for the country, because these project are definitely what the country needs and they are not in conflict with gas master plan. Issue in the background is pricing, it is underlying issue that could be the cause of the delay especially for the major customers. We have to come to an understanding of a fair price for the resources for domestic consumption“, he said.He questioned the seriousness of government about this short term gas supply because of its strategic national imperative.
“60 years we cannot produce power for ourselves. The IOCS have to see that it is of national interest. No body will bring money and we will not make return on investment.Most third party investors, we were told that Nigeria had a large reserves of gas and that gladdened us and we decided to spend so much mioney to develop it for the betterment of Nigeria. Our experience with the IOSs have not been good. We approached Shell and we were allowed access to the flow stations, we found that there nothing to invest in. some were flaring less than one million scf”, he said
He said the firm’s initial plan was to invest in 120mscuf plant that will produce LPG and in turn produce about 80scuf of dry gas.Another investor from the Global Gas however reported that its long-term gas production agreement with Shell had progressed well, adding that from operational forecast, the firm would be able to deliver 1000mw in the next 18 months. The only hindrance the firm has had is the disruptions caused by the activities of militant youths in the Niger Delta.
The Minister of Petroleum, Dr, Rilwanu Lukeman who presided over the meeting expressed the hope that the teething problem confronting the roll-out of gas development plan in the country will soon be overcome.“I hope the meeting will help in the process to accelerate the development of gas in the country. We will try and see what can do especially with the return of peace in the Niger Delta following the amnesty programme to use the opportunity to fast-track the project”, he said.Lukman lamented the enormous challenge facing the country especially in the power sector which has been aggravated by the crisis in the domestic gas supply.