Harnessing natural gas for Nigeria’s economic transformation

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The demand for natural gas in the global and domestic market is on the increase globally, and Nigeria sits on top 600 trillion cubic feet of gas with over 209 trillion proven reserves. FESTUS OKOROMADU writes on the urgency for harnessing this commodity now that the market is in need of it.

‘‘The rising global demand for cleaner energy sources has offered Nigeria an opportunity to exploit gas resources for the good of the country. We intend to seize this opportunity.’’ These were the words of former President Mohammadu Buhari while speaking at the official declaration of the years 2021 – 2030 as “Decade of Gas.”

In addition, the former president who noted that Nigeria has huge gas resources with little oil hinted that the declaration was to set the tone for the development of the industry in the next ten years. He stressed that given the country’s potential of about 600 trillion cubic feet of gas, the commodity has the enormous potential to diversify Nigeria’s economy.

Under the plan launched in Abuja on Monday, March 29, 2021, Nigeria is expected to collaborate with other stakeholders to develop infrastructures and harness the natural gas which the country is said to have 209 trillion cubic feet proven reserves and use it as a key driver of economic growth and development.

Unfortunately, nearly three years after the launch of the plan not much has actually transpired both on the side of the Federal Government in terms of actualisation of the policy statement.

The Nigerian National Petroleum Company Limited on its part appears to be overwhelmed in the task of generating income for the government and thus seemingly finding it difficult to secure the necessary funds required for partnership or otherwise in terms of providing infrastructure for the full take off of the industry.

However, the current economic situation Nigeria now finds itself leaves no one in doubt that the time to focus on harnessing our potentials in natural gas to the fullest is now.

In what can best be described as a wake-up call, last week, the visiting German chancellor, Olaf Scholz, re-echoed the rising demand for Nigeria’s natural gas in Europe.

The German leader who was on a state visit to Nigeria said his country has “a considerable demand for natural gas and hydrogen to fuel its economy and energy transition.”

While calling for an immediate scheme for the commencement of gas supply to Germany, he said, “Concrete amounts should be agreed on in negotiations between Nigerian gas producers and German gas traders.”

Barely a week before Scholz’s visit, the EU’s Commissioner for Energy in Nigeria, Ms. Kadri Simson, had announced the body’s renewed interest in Nigeria’s gas, saying “the bloc is reinforcing its diplomatic relationship with its reliable Liquefied Natural Gas partners like Nigeria in the short-term to enable it to bridge the gas supply gap in the continent that resulted from the Russian/Ukraine war.”

Late last year, precisely on September 7, 2022, Polish President, Andrzej Duda, met former President Muhammadu Buhari at the State House, Abuja where he expressed his country’s desire to increase energy imports from Nigeria.

The new demand from the European market for Nigeria’s gas is fallout of the ongoing Russian-Ukrainian conflict.

Indeed, the war has rekindled Europe’s interest in Africa’s energy market as EU nations seek alternatives to sanctioned Russian supply.

Coming on the heels of Nigeria’s declaration of 2021 – 2030 as a decade of gas vis-à-vis the planned construction of the Nigeria – Morocco gas pipeline and the West African gas pipeline project can best be described as a huge opportunity for Nigeria to revive her ailing economy.

“We have given commitment to the minister that the project will be completed by July 2024; we are working very hard irrespective of the challenges; challenges will always exist but Oilserv has repeatedly built gas pipelines for the nation”

Similarly, in the domestic front and within the West Africa sub region, the market potentials are huge. No thanks to the present administration’s removal of subsidy on petrol and the subsequent hike in the prices of petroleum products.

Interestingly, the government via the NNPCL has already earmarked some infrastructure development projects and in some cases commenced operations, but the spread at which they are being executed appears to be slow and the reality is that the world may not continue to wait for us. Hence, we must make haste while the sun is shining.

The Nigeria – Morocco gas pipeline initiative

In December 2016, the Nigerian National Petroleum Corporation as it was then known, on behalf of the Federal Government signed an agreement with the Moroccan Office National des Hydrocarbures et des Mines for the construction of the Nigeria-Morocco Gas pipeline.

The project is estimated to cost $25 billion and planned to be completed in stages over 25 years. Starting from Nigeria, the 5,660 kilometers long NMGP will pass through Benin, Togo, Ghana, Cote d’Ivoire, Liberia, Sierra Leone, Guinea, Guinea-Bissau, Gambia, Senegal, and Mauritania, to end at Tangiers, a Moroccan port on the Strait of Gibraltar, with a possible extension to Europe through Spain.

Some landmark achievements towards meeting the set goal includes; approval to commence conduct of a feasibility study in August 2017; completion of feasibility study for the construction of the pipeline in January 2019 as well as the award of contract for the first phase front – end engineering and design project to Penspen Engineering Company same month; presentation of the pipeline proposal to a special meeting of the Economic Communities of West African States in August 2019; kick-off of the second phase of front end engineering and design in March 2020. King Mohammed VI and former President Muhammadu Buhari affirmed their commitment to the construction of the Nigeria-Morocco gas pipeline in February 2021; the signing of a MoU between ECOWAS, Nigeria and Morocco in September 2022; and the signing of a MoU between NNPC Ltd, ONHYM and energy companies of four other ECOWAS countries in June 2023.

It can be safe therefore to say at this point that the best that has happened to the project is the signing of documents. Thus, concerned citizens are worried that at the pace the project is being attended to the European market may have found alternatives to meeting its natural gas needs by the time Nigeria is through with the project.

Although the initial plan of the project was estimated for 25 years, the current reality in the global energy industry is calling for a change of timeline for it to remain relevant. Luckily, for us, apart from the environmental crisis posed by hydrocarbon fuel leading to the demand for alternative sources of energy which give natural gas prominence, the ongoing war between Russia and Ukraine is propelling the need to fast track the NMGP project.

However, the battle for the global market space demands urgency, creativity, innovation and smart thinking. The days when slow and steady wins the race are over, now it’s the fast and accurate who win.

Unfortunately, the sense of urgency required for the actualisation of this project taking into cognizance the current market demand and the financial crisis facing the Nigerian government appears to be absent at the moment. The government of President Bola Tinubu and the NNPC Limited must as a matter of urgency summon the will to fast-track the pace of the project by incorporating the private sector into the execution of the project.

The AKK gas pipeline

At the domestic front, the NNPC in July 2013 announced tenders for the development of the Ajaokuta-Kaduna-Kano gas pipeline project. But nothing serious happened until four years after, precisely June 2017 when a project proposal was submitted to the Infrastructure Concession Regulatory Commission.

Originally, the pipeline project which forms Phase One of the Trans-Nigeria Gas Pipeline project was estimated to cost $2.8bn, and initiated to be executed via a build and transfer public-private partnership model, which involves the contractor providing 100 percent of the funding. While the Bank of China and Sinosure were to fund the project with the Nigerian Fidelity Bank supporting the project, however, the funding situation seems to have changed as the NNPCL is said to be solely funding it now.

Meanwhile, the PPP compliance certificate of the AKK project was issued in July 2017 along with the approval of the feasibility study, while the Federal Executive Council granted approval for the project in December 2017.

Nevertheless, the execution of a 614km-long natural gas pipeline project designed to transport gas from southern Nigeria to the northern cities of Kaduna and Kano for the purpose of energising the nation did not commence until July 2020 and the commissioning scheduled for 2022.

The project is being executed in three phases; with Phase One covering the construction of a 200km-long segment between Ajaokuta and Abuja Terminal Gas Station. Phase Two comprises a 193km-long section between Abuja and Kaduna and Phase three involves the construction of a 221km-long section between the Kaduna TGS and Kano TGS.

Other infrastructure planned for the development includes various associated valve stations, as well as intermediate and terminal facilities. The project requires the laying of approximately 51,200 steel line 40in-diameter pipes featuring a total combined weight of 240,768t.

Furthermore, the project utilises 24in-diameter steel line pipes for spur lines, as well as 40in-diameter line break valves and future tie-in valves and is expected to transport 3,500 million metric standard cubic feet per day (Mmscfd) of dehydrated wet gas from several gas gathering projects located in southern Nigeria.

The journey so far

Last month, the Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, led a team of executives from Nigeria Midstream and Downstream Petroleum Regulatory Authority, NNPCL and others on an inspection tour of the Ajaokuta – Abuja axis of the project.

During the inspection tour which took the team to see the progress of work at the Pai River crossing session in Kwali area councils of the FCT Abuja, the Minister and his team took time to interface with the firm executing the project, Oilserv Nigeria Limited.

The Chairman of Oilserv Limited, Emeka Okwuosa, who was on ground to welcome the visitors assured the Minister and his team of the timely delivery, stressing that the linear section which would carry the gas, was about 80 percent completed, while the overall completion of the entire project had reached 55 percent.

“We have given commitment to the minister that the project will be completed by July 2024; we are working very hard irrespective of the challenges; challenges will always exist but Oilserv has repeatedly built gas pipelines for the nation.

“The AKK pipeline will make a lot of difference because gas is energy and energy is wealth, and Nigeria has it in abundance but we have to have delivery systems to get the gas to where it is required for commercialisation.

“That is what we are doing here, and we assure Nigerians that it will be completed as stated,” he said.

The chairman, who described the project as an economic prosperity venture and a priority project of the Group Chief Executive of the NNPC Ltd., said it was a segment of the Nigerian gas master plan meant to distribute gas across Nigeria and provide energy.

“After completion, we would be able to have gas and NNPC would be able to deliver gas to the Northern part of Nigeria and also spur development of gas in the southern part of Nigeria and create a lot of wealth as well in the south.

“With gas available, you have power, Compressed Natural Gas (CNG) for vehicles to run with, and reduce dependency on Premium Motor Spirit (PMS), build urea and fertiliser plants, helping agriculture and so on.

“This project will change the landscape of energy delivery, and the economy of Nigeria will change,” he added.

Okwuosa, while commending the Federal Government and NNPC Ltd for their support, lauded the minister for his commitment towards the project completion, adding that the development of gas as a source of energy in Nigeria was unequalled.

“I can assure you that whatever we are doing will not be possible without the support of NNPC and we are always in sync, and they support and raise the funds to keep the project ongoing.

“Our commitment is more than 100 per cent. Though we have challenges, our job is to deal with the challenges and make sure the project is completed as scheduled,” Okwuosa said.

Activating gas for transportation (Autogas)

In August, the Federal Government approved the establishment of the Presidential Compressed Natural Gas Initiative as part of efforts to facilitate the use of gas as an alternative for automobiles to ease the impact of fuel subsidy removal on Nigerians.

The programme is targeting over 11,500 new CNG-enabled vehicles and 55,000 CNG conversion kits for existing PMS-dependent vehicles, while simultaneously bolstering in-country manufacturing, local assembly and expansive job creation in line with the presidential directive.

Already, the programme is yielding results as the Committee has set-up seven CNG conversion centres across the country. The Lagos and Abuja conversion centres were inaugurated last week with a promise to expand across the nation.

Ogun rolls out CNG buses for intra, intercity trips

Having considered a sustainability plan centred on the conversion of fuel-consumed vehicles to the Compressed Natural Gas – CNG-powered ones, the Ogun State Government has begun knowledge transfer with the training of local mechanics on engineering solutions required for the conversion.

The state government had earlier brought into the country a team of engineers from India for the conversion of fuel-consumed vehicles to CNG-enabled ones in preparation of the introduction of CNG-enabled vehicles in the state as part of the e-mobility and gas mobility programme of Dapo Abiodun-led government.

Similarly, the state government had a technical agreement with Spiro on production and supply of electric motorcycles and three-wheelers as part of measures to make the transportation system in the state not only cheaper, but also safer and more eco-friendly.

Consequently, the Ogun State Government has mandated the mechatronics engineers from India as well as the technical team from Spiro to train the local mechanics on the engineering solutions required for the conversion of fuel-consumed vehicles to CNG-enabled ones, as well as the production and servicing process of electric motorcycles and three-wheelers.

Speaking at the unveiling and presentation of the first set of CNG-powered buses for the intra and intercity trips in Abeokuta on Monday, Governor Dapo Abiodun said the launch of CNG-powered vehicles and the knowledge transfer to the local mechanics were unprecedented in the history of Nigeria.

“About a year ago, we strategically and proactively formulated our Ogun State Energy Transition Policy and what you are witnessing today is commencement of implementation, by deploying the use of CNG-fueled mass transit buses and our e-mobility for motorcycles and tricycles. These are better, cheaper, cleaner and sustainable means of transportation in our dear State.

“The state government had a technical agreement with Spiro on production and supply of electric motorcycles and three-wheelers as part of measures to make the transportation system in the state not only cheaper, but also safer and more eco-friendly”

“This initiative clearly anticipated the deregulation of the downstream sector and fuel subsidy removal while deploying alternative means of running our public transportation with cost effectiveness and environmental friendliness.

“This became imperative considering the urgent need to create a cleaner environment and also to mitigate the effect of climate change which is real, caused by the use of fossil fuels (diesel and petrol).

“As your Governor, I am extremely delighted that we are able to commence the implementation of this laudable initiative, and I am bold enough to say that we have come tops again as the first state in the country to record this feat.

“This is yet another successful Public Private Partnership with Spiro, a company that has deployed successfully in other parts of the sub- region. They have trained our local mechanics who have been actively involved in the conversion engineering and we will be setting up conversion stations across the three senatorial districts.

“This will allow us to commence the rapid conversion of commercial public mass transit buses and cars. Besides reducing the cost of transportation of goods and services to prices that are lower than before deregulation, this will furthermore and particularly provide training and job opportunities for our thousands technicians and mechanics,” he said.

Earlier, the state chairman of the Trade Union Congress, Akeem Lasisi who spoke on behalf of the entire workers in the state, noted that the introduction of CNG-powered buses was a welcome development as workers and commuters in the state would pay cheaper transport fares, thereby making lives easier to live.

The Iyaloja General ( the Head of Market Women) in Ogun State, Yemisi Abass, commended the Ogun State Government for the introduction of CNG-powered buses, saying the cheaper rates of transportation in and out the state would cut down prices of goods and services, reducing the cost of living and improving standards of living of the people.