While the big goal of tackling its sclerotic oil industry is still languishing, Nigeria has been racking up progress in its gas sector.
The government recently committed to providing a sovereign guarantee for the Ajaokuta-Kaduna-Kano (AKK) pipeline, it has published a new network code for the gas sector and is even making progress in its determined plans to reduce flaring.
Nigerian Minister of State for Petroleum Resources Timipre Sylva has nominated 2020 as the “year of gas”, which began with the final investment decision (FID) on Train 7 at the Nigeria LNG (NLNG) plant.
The country has abundant supplies of gas but lacks the required infrastructure to move the feedstock to where it could be used, Bracewell’s partner Adam Blythe commented. “Developing that gas infrastructure can be costly and there are significant funding pressure on midstream developers,” he continued, saying risks in the sector were connected to difficulties in securing robust off take deals.
“For example, a key potential user of gas should be the country’s power industry, but this stays under-developed and the privatisation process carried out in 2012 has highly been perceived as unsuccessful and suffered from serious structural deficiencies – and left gas producers disclosed to significant off taker payment risk with little credit security – with no plans to repeat this,” Blythe told Energy Voice.
There is an environmental advantage to shifting to gas, the Bracewell partner said, noting the demand of reducing the country’s reliance on small-scale diesel generators.