Despite FG’s Platitudes, Nigeria’s Gas Production Remains Stagnant in Five Years

.4% of total production unaccounted for, says NEITI .Production from JVs decreased by 3.42% between 2019 and 2020

Emmanuel Addeh

In spite of the much-talked-about renewed attention to the use of natural gas in boosting Nigeria’s foreign earnings, there was no significant growth in the country’s production level between 2016 and 2020, THISDAY has learnt.

The latest report from the Nigeria Extractive Industries Initiative (NEITI), covering 2020, revealed that indeed the country produced more of the commodity when there was little focus on it compared to when programmes to expand its exploration and use gained national prominence.

Since the current administration took over the reins of governance, a number of programmes to reduce gas flaring and make it more available for use nationwide have been launched, while other initiatives to expand the growth of the commodity have taken centre stage.

But despite all the efforts, there’s was no marked growth in gas production during the period under review, even though gas utilisation increased in-country marginally.

In 2017, the federal government launched the national gas policy to end gas flaring and create an enabling environment for investors, seek value addition for gas, and improving governance in the sector.

A year later, President Buhari signed the Flare Gas Regulations, 2018, which provides a fiscal and commercial framework for the implementation of the NGFCP.

Similarly, in December 2020, the National Gas Expansion Programme (NGEP), which aims to deepen domestic usage of natural gas in its various forms, was launched.

During the period, the government stated that it completed the 342KM Escravos-Lagos Pipeline System Phase 2 (ELPS 2), running from Oben node in Delta State to Itoki in Ogun State, and doubling the capacity of the ELPS from 1,100MMscfd to 2,200MMscfd.

This was in addition to the completion and commissioning of the Integrated Gas Handling Facility and LPG Processing and Dispensing Plants, said to be the largest onshore LPG plant in the country.

It was built and is being operated by the Nigerian Petroleum Development Company (NPDC), an upstream subsidiary of NNPC in Oredo, Edo State.

Furthermore, the federal government has touted the commissioning of the Lot 2 of the 130KM Obiafu-Obrikom-Oben (OB3) Gas Pipeline, running from Obiafu/Obrikom in Rivers State, through the Oben Metering station in Edo state, to link to the Oben node on the Escravos Pipeline system (ELPS), in Delta state as one of its achievements. The OB3 Pipeline has a capacity to deliver 2,000MMscfd of gas.

Furthermore, in 2018, the NNPC signed agreements on what it termed seven “critical gas development projects”, to deliver about 3.4 billion standard cubic feet of gas per day, to boost domestic gas supply, and support power generation and industrialisation.

They include the development of Assa North/Ohaji South field, Samabri-Biseni, Akri-Oguta, Ubie-Oshi and Afuo-Ogbainbri unitised gas fields, among others.

But the projects appeared to have done little to boost the country’s overall supply, according to the NEITI report, recently released in Abuja.

During the five years under review, in 2016, Nigeria produced 3,051,249 mmscf of gas, followed by the highest production level in 2017, when the country did a total of 3,499,695 mmscf.

This production declined sharply in 2018, as Nigeria produced 2,909,144 mmscf for that year, recording a little improvement in 2019 to 3,047,507 mmscf and declining again to 3,013,640 mmscf in 2020.

Of the figures, Joint Ventures (JVs) produced 68.36 per cent as Shell, Mobil and Nigerian Agip Oil Company (NAOC) led the production from the arrangement.

The NEITI report stated that 114,781.44 mmscf that is, about 4 per cent was the total quantity of gas unaccounted for, based on the templates submitted by the 54 companies assessed.

But while total gas production decreased by 1.11 per cent between 2019 and 2020, the country’s total relative gas utilisation of the commodity rose to 3.90 per cent.

The total sum of $1.08 billion was the value of the gas sold by the NNPC in 2020, comprising NLNG feed stock at $523.8 million, export at $83.8 million, domestic at $180.4 million, while third party project falcon yielded $206.6 million.

The NEITI report also aligned with the position of an oil and gas industry player and ex-Chief Executive of Seplat as well as the current Vice Chairman of Platform Petroleum, Austin Avuru, who last week argued that the federal government’s sloganeering has not done much to increase the country’s gas production.

“We have to match our gas slogans with effective, measurable, policy actions to drive investments in domestic gas supply. The current flip-flops on pricing and commercial structure of the gas business cannot stimulate investments in the sector.

“The situation is the same with domestic gas delivery. Even though we are weaving all the right slogans about the future of gas in Nigeria, in the past five years, I can only point at a couple of Nigerian independents who are investing in gas development and processing for the domestic market,” he explained.

Between 2019 and 2020, the report showed that production from JVs decreased by 3.42 per cent, from Production Sharing Contracts (PSCs) slumped by 9.66 per cent, the one from Service Contract fell by 100 per cent as there was no such arrangement in 2020.

Similarly, production from marginal field arrangements slumped by 5.17 per cent although the one from sole risk arrangement was up by 49.6 per cent.