Harnessing Nigeria’s 206Trn Cubic Feet Of Gas Potentials

epa07962893 Gas pipes and an analog pressure-meter are pictured prior to the inauguration ceremony of the Podisor gas compression facility, part of the BRUA pipeline project, near Podisor village, 50 Km south-west from Bucharest, Romania, 31 October 2019. The Bulgaria-Romania-Hungary-Austria (BRUA) pipeline project, formally conceived in 2016 and partially sponsored by the European Union, is projected to deliver 4.4 billion cubic meters per year to the prominent regional hub located in Baumgarten, Austria, in 2022. The Romanian pipe sector will have 479 Km when it will be finished, and three compression facilities, the project being developed by Transgaz, the technical operator of the national natural gas transmission system in Romania. The first phase of the pipeline is expected to be operational by the end of 2019 and the second phase by 2022. EPA-EFE/ROBERT GHEMENT

With the subsidy already removed from kerosene as a litre costs around N325, the attempt by Nigerians to move towards cleaner cooking source through the use of cooking gas also face daunting hurdles due to spiraling price, a development which has threatened the realisation of the Sustainable Development Goals (SDGs). CHIDI UGWU writes that it nothing is done fast many households may return to the use of firewood and charcoal with huge costs on the health of Nigerians 

Nigeria currently ranks 9th in the world-proven gas reserves with over 206 trillion standard cubic feet of gas reserves. The country no doubt has the capacity for adequate utilisation of its enormous gas resource with an estimated population of 195,874,740 people, distributed as 51.7 percent rural and 48.3 percent urban, and with a population density of 167.5 people per km2.

However, Nigeria’s gas utilisation remained dismally low due to several reasons, which range from pricing to lack of feasible and efficient systems of harnessing the nation’s abundant gas for industrial and household utilisation. Instead, for many years, a good percentage of Nigeria’s gas has been flared making the country rank in the top 10 gas-flaring countries in the world, with 7.4 billion cubic feet flared in 2018. 

The situation has kept the nation’s economy in abeyance with electricity-generating companies crying for lack of gas worsening the energy situation with generating capacity of 5000 megawatts in so many years. Gas used in homes and industries is mostly imported as over 56 per cent of gas used is reportedly said to be imported making the commodity vulnerable to economic indexes, especially the continuous weakness of the Naira against the dollar and the increasing price of natural gas at the international market.

A kilogram of the cooking gas, which traded for about N300 earlier this year has already moved to over N500 across the country. Earlier this year, 6kg of gas cylinder sold for N1, 800, the same size was sold for N3, 000 amidst indications that the price may rise further. In May, Naira was devalued from N379/$1 to N410.25/$1. As of yesterday, the naira was exchanging at N510/$1 on the parallel market, where most Nigerians purchase their foreign exchange. The global price of natural gas has also witnessed over a 60 per cent increase, trading close to $4 per million British Thermal Unit (MMBtu) yesterday. 

With subsidy already removed from kerosene as a litre yesterday traded around N325, the attempt by Nigerians to move towards cleaner cooking source through the use of cooking gas face daunting hurdles, a development which threatens realisation of the Sustainable Development Goals (SDGs).

While more Nigerians are already returning to cooking by firewood and charcoal, stakeholders expressed concerns that the number of women, who die in the country yearly from biomass, may double. Reportedly, the high demand for fuelwood for cooking and income increased the rate of deforestation. Deforestation has already pushed Nigeria to the verge of environmental disasters, especially desertification, loss of ecosystem, loss of biodiversity, land degradation, soil erosion, as well as economic risk.

Speaking on the implications of the development on her, a food vendor in the Gwarimpa area of Abuja, Chidinma Elizabeth Godwin told Saturday INDEPENDENT that she resorted to charcoal as the price of gas has taken a toll on her business. “I prefer to use gas, but the price is getting too high. I have charcoal to balance my profit margin. It is difficult to increase the price because people are also complaining. Sometimes we have to reduce the quantity of the food instead of price increase,” she said.

Godwin noted that she feels the impact of the charcoal on her health, stressing that it was difficult to stay closer to the biomass source compared to the gas cooker, but has no option than to remain in business.

Ghana National Petroleum Corporation (GNPC), Petroleum Commerce Research Chair, University of Cape Coast Oil & Gas Studies, Prof Wunmi Iledare, who noted that cooking with Kerosene, is as bad for public health as deforestation to the environment, noted that prevailing development affects the standard of living and sustainable development. She stressed that Nigerian may only be flagging its 206 trillion standard cubic feet of proven gas reserves, which does not benefit the masses.

“Significant amount of investment is required to translate the reserves to usable form, Iledare added that, “LPG is a cleaner fuel but affordability makes delivery tasking without lowing cost of production.”

According to him, the public must stop expectations that everything must be free because there is petroleum in the land. “Petroleum production is good for nothing if its development does not improve the quality of life of the people, not just the elite if sustainable development is to be optimised,” Iledare said. The professor added that energy and sustainable development remained intertwined and without access to sustainable energy, economic freedom and development would remain at risk as well as the quality of life.

Founder and Executive Director, International Support Network for African Development, (ISNAD-Africa), Adedoyin Adeleke said only about a quarter of LPG supply in Nigeria are produced locally, stressing that the importation of LPG inflates the cost of gas in the country making it unaffordable for most Nigerians. With increasing cost of living, unemployment, as well as unabated poverty rate; the vast majority of Nigerians would be pushed to resort to fuelwood for cooking hence increasing deforestation in the country.

“It is unfortunate that many do not know the wide and diverse negative impact of increasing deforestation on the economy, the people, and the planet. Nigeria, all nations of the world had a historical economic loss to the COVID-19 pandemic. 

“The emergence of COVID-19 has been linked to destruction of the natural wall between humanity and nature. One of such natural wall is the forest. The more deforestation, the more the interference of humanity with nature, which has contributed to the emergence of zoonotic diseases such as EBOLA, and COVID-19.  An impact of increasing deforestation is river dryness, unfortunately, many do not know how this has negatively impacted Nigeria,” Adeleke stated. He also noted that the need for the government to attract, induce and support the private sector for massive investment in gas production. 

Adeleke added that the consequent exclusion of importation associated cost; economies of scale and participation of multiple players would catalyse competition, which would crash the price of LPG in the country. 

To him, local production for local consumption remains the way, noting that while it would be good to export, local consumption should be the priority.  

Special Advisers to the Minister of State for Petroleum Resources on Gas Business Development, Brenda Ataga also told Saturday INDEPENDENT that the commodity might not become affordable unless the development of the resources is domesticated. According to her, the price may continue to rise as prevailing microeconomic indexes are rising, adding that there was a need for more Nigerians to invest in developing the sector.

Programme Manager, National LPG Expansion Implementation Plan, Dayo Adeshina said the product, which had sold at $260 per ton earlier in January now sells for $650 at the international market. According to him, while the same pricing index used at the international market is used locally, the depreciation of the Naira against the dollar is currently fuelling the hike in price. He noted that the Federal Government is currently working on other domestic sources, hinting that there was a need to drive volume into the market to ensure competition. “When more volume comes into the market then we can start to see a decrease in price. One of the things we don’t have control over is the pricing index,” he said.

Currently, a lot of efforts are being placed towards making use of the abundant reserves of associated gas and reduced flaring, as many Nigerian oil fields are saturated, and have primary gas caps. The current intervention, announced in Abuja by the Permanent Secretary at the Ministry of Petroleum Resources, Bitrus Nabasu is expected to domesticate the development of the resources and allow indigenous players to advance the sector.

The intervention, expected to be financed under the Power and Airlines Intervention Fund (PAIF) in line with existing guidelines and regulations of the Fund, would according to him be an elixir to investment in the development of infrastructure to optimise the domestic gas resources for economic development while spurring the development of gas processing, small scale petrochemical and gas cylinder manufacturing plants as well as LCNG regasification modular systems.

Nabasu stated that the intervention would encourage motorists to use Compressed Natural Gas (CNG) and provide resources for power generation companies while encouraging the use of Liquefied Natural Gas (LPG) for domestic cooking, transportation, and captive power. He sees the development as leverage for additional private sector investment in the domestic gas market while prioritising employment in the country. 

He believes that the scheme would promote autogas transportation system conversion and distribution infrastructure, enhancement of domestic cylinder production and distribution by manufacturing plants. Nabasu said companies must demonstrate technical and commercial capacity, adding that only a few applications have been received for the project. He also disclosed that the Federal government would complete the gas flare commercialisation programme to boost gas resources in the country.

 Also, Brenda Ataga, Special Advisers to the Minister of State for Petroleum Resources on Gas Business Development, said as much as three million jobs are expected from the programme across the different value chains of the project. She noted that government intends to further awareness and promote micro retailing outlets across the country. Ataga stated that the commodity might not become affordable unless the development of the resources is domesticated.

According to her, the price may continue to rise if prevailing microeconomic indexes are rising, adding that there was a need for more Nigerians to invest in developing the sector.

Stakeholders in the energy sector also believe that the latest interventions would help address the escalating price of Liquefied Petroleum Gas (LPG) otherwise called cooking gas.

Recently, the price of gas sent panic to consumers and stakeholders in the energy, health, and environmental sectors as commodities surged by over 80 per cent leaving looming health and environmental burden.

For over 90 million Nigerians, who live on less than one dollar per day, cooking gas may have become a luxury amidst worsening unemployment, high inflation, and impacts of the Covid-19 pandemic hence any intervention such as the latest Central Bank of Nigeria (CBN) N250 billion is applauded.

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