Nigeria: more of the same? [NGW Magazine]

After its flawed election of February 23, Nigeria re-elected her current president, Muhammadu Buhari. He will be president for the next four years and is now contemplating what must be a wearyingly familiar to-do list. Near the top must be the linked aims of reducing flaring, boosting gasification and to generate more stable electricity.

Nigeria’s presidential elections were meant to have taken place the week before but the Independent National Electoral Commission (INEC), the agency responsible for the conduct of free and fair elections, postponed them, citing logistics challenges.

Presently, the Buhari administration has succeeded in engaging stakeholders and investors for gas projects like the Nigeria-Morocco Gas Pipeline, the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline as well as the Obiaku-Obrikom-Oben (OB3) Gas Pipeline.

The administration has, through joint ventures with Anglo-Dutch major Shell and Geometric Power, installed a 141-MW gas to power plant for the industrial market at Ariaria, Abia State. It has also installed the Egbaoma Gas Processing Plant, which will be receiving gas supply from Anglo-Dutch major Shell through the OB3 gas pipeline in Q2 this year.

According to Frontier Oil CEO Thomas Dada, the return of Buhari as president is good for the natural gas sector because the same market players will be in charge of executing pending projects. On the other hand, it might also bode ill, for the same reasons. A small poll of nationals taken by NGW at IP Week thought that parts of the petroleum industry governance bill might make it through parliament but not the whole body of legislation.

The Buhari administration has put zero gas flaring measures in place using the Nigerian Gas Flaring Commercialization Programme (NGFCP), which is a sub-division of the Department of Petroleum Resources (DPR). The programme is accepting bidders who can monetise associated gas instead of flaring it and share the profit with government.

The NGFCP, according to a source on the Gas Monitoring and Regulations team of the DPR, offers LNG investors access to low-cost flare gas with the freedom to market products from flare gas in their market of choice.

Also, Nigeria LNG advancing its Train-7 project and Greenville LNG commissioning its plant in Rivers State under President Buhari, are indicators that the administration intends to pursue growth in the country’s natural gas sector.  

Aside from approving the National Gas Policy in 2017, the Buhari administration also introduced the Seven Big Wins project to the Nigerian populace. According to petroleum minister Ibe Kachikwu, the Seven Big Wins project is aimed at developing a stable and enabling oil and gas landscape with improved transparency, efficiency, a stable investment climate and a well-protected environment.

However, so far the Buhari administration has not made the most of its gas reserves. Policies like the petroleum industry governance bill (PIGB), still need to be approved and implemented.

Unfortunately, Buhari has said that his refusal to sign the PIGB is due to the fact that his powers as self-appointed petroleum minister will be rendered irrelevant by the bill, despite the fact that same bill will encourage transparency in the oil and gas sector. This is especially necessary in the case of the National Petroleum Corporation (NNPC), whose opacity is problematic.

Also, it is important to note that in January 2019, Buhari directed the NNPC to explore for oil in the Lake Chad Basin, Benue Trough, and, Gongola Basin. This follows from the initial directive given by Buhari in 2016, to explore for more oil in the north. According to a few stakeholders in the gas sector, this shows the Buhari administration is still mainly focused on oil, not on gas.

Although the Buhari administration has passed some policies and started developing some projects in the natural gas sector, the ease of doing business in the country is still at a low level, which could threaten investor confidence. Buhari’s re-election could mean that Nigeria will keep losing ground in real gross domestic product per capita against other sub-Saharan countries.

Nigeria’s power ministry grid adviser Ronald Verraneault told NGW in 2018 that best practices are not being adopted by the Buhari administration regarding the gas to power sector. Blackouts are rife and, he said, some investors have come with direct solutions to Nigeria’s power problem. But they all leave, he said, frustrated by bureaucratic bottlenecks even when they plan to cover the entire costs of the project themselves without the need for state support.

Buhari’s main opposition

In November 2018, rival Atiku Abubakar said his government, if successful at the polls, would focus on maximising the potential of the nation’s gas sector. Nigeria needs to emulate other gas-producing economies and put in place strategies to find new gas reserves, monetise them and to bring gas flaring to the absolute minimum, he said. His aim was to do this by expanding domestic gas production to meet power generation demand as well as manufacturing demand, ensuring transparency and accountability in the operation of all private and public institutions working in the sector.

Abubakar said that one of the greatest challenges facing prospective investors in the natural gas sector was the lack of good quality seismic data. Had he won, his government would have incentivised multi-client data-gathering companies to collaborate with the Department of Petroleum Resources to carry out seismic acquisition. It would also have offered incentives to boost exploration.

This, according to gas stakeholders, made Ahubakar a better candidate: he is business-minded and has a better understanding of the need to maximise Nigeria’s gas resources through stable and consistent policies. Clear-cut business strategies would create investor confidence and further drive the sector forward.

If history is anything to go by, the omens are not good. Past Nigerian holders of public office, who come back to office for a second term, usually display less urgency than in their first term since they cannot run for office for a third term. They also abandon some projects for the same reason. But Buhari’s ‘change’ mantra could make a difference in this regard.