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By Pita Ochai
With the emerging need for domestic energy security, particularly to meet the growing demand for gas supply in the power sector, Nigerian oil independent companies are expected to contribute 50 percent to domestic gas supply by 2018 to power the economy.
Industry experts premised the possibility of this aspiration on the increasing acquisition by indigenous independent of assets being divested by international oil companies operating in the country.
In what is the latest acquisition, Oando Energy Resources, the upstream business of Oando Plc, recently concluded its acquisition of ConocoPhillips Nigerian assets. Chevron and Shell are also divesting some of their onshore and shallow water assets, which a number of local players are eager to snap up.
Nigeria, which is home to the world’s ninth biggest gas reserves, with about 187 trillion cubic feet (Tcf) of proven gas with current production estimated at 8.24 billion cubic feet per day of gas, has seen drastic drop in power supply in many parts of the country as it grapples with gas supply shortfalls.
By 2018, 50 percent of domestic gas production to power the economy will come from Nigerian independent companies, Austin Avuru, managing director, Seplat Petroleum Development Company, said at the 38th Nigerian Annual International Conference and Exhibition (NAICE) in Lagos. “The entire refining space will be with independents. If Dangote is able to build his refinery, a couple of other refineries will follow either greenfield projects or through privatisation of existing refineries. By 2020, Nigeria’s refining capacity will reach 700,000 barrels per day,” he said.
“If you look at the shale revolution in the United States, it was not done by the majors. It was done by the independents. So if we are going to think in terms of energy security in Nigeria, we must find a way to grow Nigerian independents. The security of domestic energy for Nigeria is in Nigerians hands,” said Wumi Iledare, president of International Association of Energy Economics.
The government needs to come in and create an enabling environment that investors will more than be delightful to invest in Nigeria, he said, adding that “the resources to develop are there, especially natural gas. The people are skilful to deliver, the only thing Nigeria does not have is a governance structure that supports investment.”
In a bid to ensure gas supply availability in the country, the federal government has reaffirmed its strategic focus towards growing natural gas production to 8 billion cubic feet per day (bcfd).
Diezani Alison-Madueke, minister of petroleum, in her state-of-the oil and gas industry address at the event, said gas supply to the domestic market grew to an all-time high of 1,500 million cubic feet per day of which about 70 percent was deployed to the power sector and the balance in support of the manufacturing sector.
“In 2013, we sustained an average crude oil and condensate production of 2.3 million barrels per day (bpd) and gas production of 7.6 bcfd despite crude oil theft and pipeline vandalism. Average crude oil theft and deferment during the same period was 215,000 barrels per day.”