Gas supply: The indigenous companies’ challenge By Sebastine Obasi

Through natural gas production has steadily increased in recent years in line with domestic supply obligations and the broad road map of the Gas Master Plan (GMP), the recent militant attacks on oil and gas facilities has exposed the fragility of the country’s gas supplies especially to the power sector.

 In less than three weeks, Nigeria’s power sector lost over N36billion, primarily as a result of gas shortage caused by the recent bombing of pipelines supplying gas to electricity generation plants. Between May 27 and June 13, 2016 for instance, the country’s power sector lost an average of N2bn daily as a result of different challenges, with gas accounting for over 85 per cent of the total constraints.

The disruptions to gas supply have prompted the Federal Government to look towards developing alternative sources of gas supply for power generation in the country. A senior government official while speaking at a recent Nigerian Gas Association forum, stressed “the need to explore the gas reserves in the inland basins”.

The inland basins in the country include the Anambra Basin, the lower, middle, and upper Benue trough, the south eastern sector of the Chad Basin, the Mid-Niger (Bida) Basin, and the Sokoto Basin.

 Nigeria has never been short of big ideas and projects when it comes to gas. Nigerian Liquefied Natural Gas (NLNG) Trains 7 and 8, Brass LNG, and Olokola LNG have been awaiting final investment decisions for years.   Trans-Saharan Gas Pipeline project was virtually dead on arrival, though there are talks of a revival of recent. The 680-kilometre gas transport project, West African Gas Pipeline, jointly-owned by Shell, Chevron and the Nigerian National Petroleum Corporation (NNPC) has failed to deliver the anticipated volume of gas due to a plethora of reasons ranging from policy, politics, infrastructure, funding to security. New gas supplies especially from International Oil Companies (IOCs) are under way. The Southern Swamp Associated Gas Solutions Project will add 100m scf per day to domestic supplies by 2017; the Forcados Yokri Integrated Project, will add another 80m scf per day of gas; the two-phase $3.5 billion Assa-North/Ohaji-South fields on OML 53 are scheduled for completion in 2018amongst others.

While the country waits to unlock the long term projects, it is worthwhile to take a look at the small independents that have managed to keep their eye on gas development despite challenges. The Uquo gas project owned by Seven Energy and Frontier Oil readily comes to mind. The East Horizon Gas Company (EHGC), a subsidiary of Oando Plc, is a special purpose vehicle set up to develop, finance, construct and operate a gas transmission pipeline linking the Calabar Cluster of Industries to the Nigerian Gas Company (NGC) grid in Akwa Ibom state is another example. There is also the Seplat Petroleum 90m-scf-per-day Oben gas plant on OML 4.

Perhaps the most exciting of all the gas projects from the independents is the Pan Ocean’s Ovade-Ogharefe gas processing facility – the largest carbon emission reduction project in sub-Saharan Africa located in oil mining lease (OML) 98.The history breaking Carbon emission certification is bigger than what even the IOC’s have done. The project was designed to reduce greenhouse gas emission by more than two million tons of carbon dioxide annually. Pan Ocean Oil Corporation, operator of Pan Ocean/Nigerian National Petroleum Corporation joint venture, gas project was successfully registered under the United Nations Clean Development Mechanism, CDM of the Kyoto Protocol. It has about 99 percent gas recovery. Recovery means that the quantity of gas received from the flow station tallies with the quantity of gas processed, and this will also tally with the quantity used as fuel gas to run the engines plus gas generators and compressors, and the quantity of gas released for power generation. Pan Ocean qualified for the Carbon Credit Scheme of United Nations Framework Convention on Climate Change (UNFCCC) in February 2009.

Seven Energy, is another shining example of indigenous leadership in Nigeria’s oil & gas sector. Seven Energy has been severally recognized for its  commitment to sustainable power supply in Nigeria through efficient gas delivery. Commenting recently on an award for leadership in the gas sector, Seven Energy CEO, Phillip Ihenacho, Chief Executive Officer, Seven Energy said,  “We are pleased that our effort in providing the much needed gas for sustainable power supply and for use by industries to drive economic growth is being recognised. We remain fully committed to delivering on the vision that sees Nigeria powered by its own gas resources”. In less than 10 years of operations, Seven Energy has emerged as the leading integrated gas company in south east Nigeria.

This indigenous operator has a unique focus on the emerging Nigerian domestic gas market; her upstream assets include licence interests in the Uquo Field and the Stubb Creek Field (south east Niger Delta), an indirect interest in OMLs 4, 38 and 41 with Nigerian Petroleum Development Company (north west Niger Delta) and licence interests in OPLs 905, 907 and 917 (Anambra Basin). Her midstream infrastructure assets, focused on south east Niger Delta, include the 200 MMcfpd Uquo Gas Processing Facility and a gas pipeline network of 227 km with distribution capacity of 600 MMcfpd.