How Tinubu’s Oil Sector Reforms Accelerated Takeoff of New Gas Project
Emmanuel Addeh in Abuja
The federal government yesterday disclosed that the recent reforms embarked upon by the Bola Tinubu administration had led to the takeoff of the $550 million upstream gas project, a deal between the Nigerian National Petroleum Company Limited (NNPC) and TotalEnergies.
A statement from the office of the Special Adviser on Energy to the President, Olu Verheijen, stated that the recent directives would further unlock up to $2.5 billion in fresh investments in the country’s oil and gas sector.
Verheijen was speaking at a luncheon organised as part of the inaugural US-Nigeria Strategic Energy Dialogue, hosted by the US State Department in Washington, DC.
According to her, energy reforms introduced in Nigeria since June 2023 had focused on improving energy security, attracting investment and deepening collaboration with key partners like the United States government.
The dialogue was established in June 2023 to create a platform for the US and Nigerian governments and private sector to deepen bilateral cooperation to advance the implementation of shared energy and climate action ambitions.
Nigeria seeks to create a robust regulatory framework and attract new investments for the production of gas for power, transportation and clean cooking.
To support the reform efforts, Verheijen recalled that Tinubu issued the five new executive orders aimed at providing fiscal incentives for investment and reducing the cost and time of finalising as well as implementing contracts to develop and expand gas infrastructure.
The directives, she stressed, aim to immediately unlock up to $2.5 billion in new oil and gas investments in the country.
Verheijen added that the reforms had since started yielding results, with the recent announcement of Final Investment Decision (FID) on a new $550 million upstream gas project that will deliver 350 million standard cubic feet of gas per day when operational.
“I cannot overstate the importance of our longstanding relationship with the US and this inaugural dialogue. The goal of this dialogue is to for us to jointly proffer solutions that will close the energy access gap for close to 100 million Nigerians who still lack reliable power.
“We want existing and potential partners to better understand our areas of priority so that our collaboration can be better targeted, and with tangible outcomes,” the presidential aide noted.
Verheijen highlighted the key reforms that the government of Nigeria has launched to improve the viability of the gas-to-power value chain since Tinubu assumed office.
These, she stressed, include initiatives to improve cash flows in electricity distribution through smart metering and the payment of outstanding debts owed investors, and to reduce carbon emissions from gas production.
She acknowledged the support of financing and technical partners like the United States government, the World Bank and the African Development Bank (AfDB) towards Nigeria’s ambitious goals to expand electricity access and reliability through grid and off-grid solutions.
Verheijen affirmed her optimism about the bright prospects for Nigeria’s energy sector, especially with the renewed focus on gas as a transition fuel in the race to meet the country’s commitments to the Paris climate agreement.
She said: “We see resilient demand for gas through the energy transition as it is a readily available, cost-effective backup to renewables while cutting emissions by half immediately.”
Also speaking, Assistant Secretary of the State Department’s Bureau of Energy Resources (ENR), Geoffrey Pyatt, pointed out that the US was interested in sharing energy security, decarbonisation and economic growth goals with Nigeria.
“The inaugural US-Nigeria Strategic Energy Dialogue sets the stage for strengthened energy collaboration between the United States and Nigeria. Together, we’re advancing shared energy security, decarbonisation, and economic growth goals,” said
The Nigerian delegation to the US-Nigeria Strategic Energy Dialogue, was led by the Minister of State for Petroleum Resources, Ekperikpe Ekpo.
It also included officials from the Ministry of Power, Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Nigerian Content Development and Monitoring Board (NCDMB), NNPC and others.
The US delegation included representatives from the Bureau of African Affairs, USAID, the US Department of Energy, the US Trade and Development Agency (USTDA), and the Export-Import Bank (EXIM).
The event saw the launch of a new Nigeria-focused initiative, the Clean Energy Alliance of Nigeria (CLEAN), by the US State Department, to mobilise stakeholders to support and promote investment in clean energy in Nigeria.
Meanwhile, the Minister of State Petroleum Resources (Gas), Ekpo, has responded to the recent statement attributed to the Vice President, Oil and Gas of Dangote Group, Devakumar Edwin, regarding the abandonment of plans to build a 1,200km subsea gas pipeline due to unfavourable government policies.
Ekpo noted that the decision to build or abandon the project was solely a business decision of the Dangote Group, taken long before the inauguration of the Tinubu-led administration.
The federal government, under Tinubu, he said, is committed to creating an environment that encourages investors who are willing to invest in projects in the gas value chain, a statement by his spokesman, Louis Ibah said.
“As a matter of fact, the federal government has taken deliberate steps over the years to encourage and stimulate investment in the gas sector by approving various policies, such as the Gas Pricing & Domestic Demand Regulations (2023), the Natural Gas Pipeline Tariff Regulations (2023), the Nigerian Gas Transportation Network Code, the National Nigerian Gas Masterplan, the National Gas Policy (2017) and the Petroleum Industry Act (PIA) 2021.
“These policies and laws provide a conducive environment for private sector investment in domestic gas development,” the minister said.
The PIA, he stressed, also established the Midstream and Downstream Gas Infrastructure Fund (MDGIF) to support more private sector investment in gas infrastructure development.
Contrary to the view expressed by the VP Oil and Gas of Dangote Group, Ekpo said there is no provision in the PIA, or its predecessor policies and/or legislation, that discourages private sector investment in gas infrastructure.
According to him, the PIA offers significant incentives for private entities to invest in the gas midstream and downstream sectors, with the government encouraging private investment in gas infrastructure development.
“Any private entity interested in investing in the gas midstream and downstream sectors is free to do so, with government incentives available to encourage investments that contribute to national economic growth and development,” the minister added.
