EXECUTIVE SUMMARY

“From Policy to Pipeline: The Evolution of Nigeria's Gas Sector in the Decade of Gas” explores Nigeria's journey in harnessing its abundant natural gas resources to drive economic growth and industrialization. The article begins by highlighting Nigeria's position as a major gas producer but notes that much of its gas is still exported, pointing to the need for a comprehensive approach to domestic gas utilisation. It examines key policy, legislative, and regulatory frameworks that support the Decade of Gas initiative, including the Petroleum Industry Act, the Nigerian Energy Transition Plan, and the Nigerian Gas Flare Commercialisation Programme. These initiatives demonstrate Nigeria's commitment to prioritising gas development and utilisation. The article also delves into the critical gas infrastructure projects, such as the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline, the Escravos-Lagos Pipeline System (ELPS), and the NLNG Train 7 project, highlighting their significance in enhancing domestic gas utilisation and supporting economic growth. Despite facing challenges such as inadequate funding and security concerns, Nigeria has significant opportunities in the commercialisation and utilisation of gas, which can improve the power sector, increase domestic consumption, and drive industrialization. By addressing these challenges and leveraging these opportunities, Nigeria can realise the benefits of the Decade of Gas initiative and transform its economy.

INTRODUCTION

Nigeria's vast natural gas reserves present a significant opportunity for the country's power sector, especially with policies aimed at boosting LPG and CNG production. However, a considerable amount of gas is still being exported, highlighting the need for a comprehensive approach to address current challenges. This article examines the Decade of Gas so far, as it relates to Policy, Legislative and Regulatory Frameworks as well as gas infrastructures in Nigeria that are advancing the course of the industrialisation and commercialisation of the economy of Nigeria in this Decade of Gas.

President Muhammadu Buhari declared the 2020s as Nigeria's “Decade of Gas” in March 2021. This initiative signifies a strategic shift towards prioritising natural gas as a critical engine for the nation's industrial development. While boasting some of the largest gas reserves in Africa, Nigeria's current production falls short compared to regional neighbours. In 2021, production stood at 1.62 trillion standard cubic feet (1.62 TSCF), lagging behind Algeria (3.56 TSCF) and Egypt (2.4 TSCF). This highlights the significant potential waiting to be unlocked through the “Decade of Gas” initiative. [1]

To fully capitalise on its gas potential, there is a need for Nigeria to focus on increasing domestic gas utilisation for power generation and other industrial applications. This requires investment in infrastructure, policy reforms, and collaboration between the government and private sector.

POLICY, LEGISLATIVE AND REGULATORY FRAMEWORKS SUPPORTING THE DECADE OF GAS

Policy and regulatory changes have significantly influenced Nigeria's gas sector, with key initiatives aimed at prioritising gas development and utilisation as a national priority. The declaration of the 2020s as the Decade of Gas by the previous administration led by President Mohammadu Buhari is dedicated to industrialising Nigeria through domestic gas utilisation. Following this, several policy and regulatory changes have been implemented to support these objectives, including the following:

1.     The Petroleum Industry Act, 2021

2. Gas Flaring, Venting And Methane Emissions (Prevention Of Waste And Pollution) Regulations, 2023

3. The Nigerian Energy Transition Plan

4. Nigerian Gas Flare Commercialization Programme

THE PETROLEUM INDUSTRY ACT, 2021

The Petroleum Industry Act, 2021 (the “PIA”) enacted in 2021, marked the culmination of a 20-year effort to reform Nigeria's oil and gas sector. This comprehensive legislation aims to address longstanding challenges and create a more efficient and competitive industry. One of its key provisions is the prohibition of natural gas flaring or venting, aligning with global efforts to reduce emissions and protect the environment.

Section 105 of the PIA prohibits gas flaring or venting, emphasising the need to conserve natural resources and minimise environmental impact. However, section 107 provides exemptions for specific situations, such as facility start-up or strategic operational reasons. This demonstrates a balanced approach to regulation, allowing for flexibility while promoting responsible gas utilisation.

GAS FLARING, VENTING AND METHANE EMISSIONS (PREVENTION OF WASTE AND POLLUTION) REGULATIONS, 2023

Regulation 6 of the Gas Flaring, Venting And Methane Emissions (Prevention Of Waste And Pollution) Regulations, 2023, (the “Regulation”) empowers the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), who is the Upstream Regulator to grant exclusive permits for accessing flare gas. These permits are granted based on specified terms and conditions, including commercialising or utilising disposed gas. This regulatory framework encourages the industrialisation and commercialisation of Nigeria's gas resources, creating opportunities for economic growth and development.

Furthermore, Regulation 10 outlines the obligations of permit holders, including the execution of milestone agreements, gas sales connection agreements, and agreements with licensees or lessees.

These requirements highlight the focus on establishing commercial relationships and infrastructure for the sale and distribution of gas, supporting industrial and commercial activities that depend on a stable and accessible gas supply. From the above, it could be inferred that the PIA and its associated regulations provide a near-comprehensive framework for the sustainable development of Nigeria's gas sector, promoting economic growth and environmental stewardship.

THE NIGERIAN ENERGY TRANSITION PLAN

The Nigerian Energy Transition Plan (ETP) was released in 2022. The ETP recognizes natural gas as a crucial transition fuel on the path to net-zero emissions. This recognition underscores the importance of gas in the nation's energy mix, which is essential for industrial and commercial activities. The plan acknowledges Nigeria's abundant gas reserves as a key factor in ensuring energy security, which is important for industrialisation and commercialisation efforts, as a reliable energy supply is essential for driving economic growth. [2]

Gas is also considered essential for stabilising the grid, which is necessary for integrating renewable energy sources at scale. This indicates that gas will not only support industrial and commercial activities directly but also enable the growth of renewable energy, which is crucial for sustainable industrialisation. The ETP also acknowledges the role of gas, particularly Liquefied Petroleum Gas (LPG), in addressing the nation's clean cooking deficit. This highlights the diverse uses of gas beyond industrial and commercial applications, showing its importance in improving the quality of life for Nigerian citizens. [3]

Moreover, the ETP emphasises the commercialization of gas as a priority for the Nigerian government. This indicates a strategic focus on leveraging gas resources for economic development, which is fundamental to industrialisation and commercialisation efforts. The ETP's recognition of the critical role of gas in Nigeria's energy transition and its emphasis on its commercialisation demonstrate a clear commitment to using gas as a driver for industrialisation and commercialisation in the country.

THE NIGERIAN GAS FLARE COMMERCIALISATION PROGRAMME (NGFCP)

The Nigerian Gas Flare Commercialisation Programme was initially launched in 2016, demonstrating the Federal Government of Nigeria's (FGN) unwavering commitment to ending the unacceptable practice of gas flaring in the country's oil fields. This commitment is further exemplified by the FGN's ratification of the Paris Climate Change Agreement and its membership in the Global Gas Flaring Reduction Partnership (GGFR), which aims for a global flare-out by 2030 and a national flare-out target by 2025. [4]

Recognising the untapped potential of flared gas, the NGFCP seeks to harness these resources to stimulate economic growth, drive investments, and create job opportunities, particularly in oil-producing communities and for Nigerians at large. The program acknowledges the importance of innovative technologies in maximising the value of flared gas. The NGFCP 2022 represents a new phase of the programme, redesigned to align with evolving market dynamics and to effectively implement the FGN's policy objectives for eliminating gas flares. This strategic approach is expected to yield significant multiplier effects and development outcomes for Nigeria. [5]

These policy, legislation and regulatory changes reflect the Nigerian government's commitment to leveraging its abundant gas resources to drive economic growth, energy security, and sustainable development. Effective implementation and monitoring will be crucial to ensure the success of these initiatives and maximise their impact on Nigeria's gas sector.

GAS INFRASTRUCTURE DEVELOPMENT IN NIGERIA

1. The Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline

The Ajaokuta-Kaduna-Kano (AKK) gas pipeline is a critical infrastructure project spearheaded by the Nigerian National Petroleum Corporation (NNPC). This 614km pipeline, valued at $2.8bn, is a vital component of Nigeria's Gas Master Plan, designed to efficiently transport natural gas from the southern region to central Nigeria. The AKK pipeline is the first phase of the larger 1,300km Trans-Nigerian Gas Pipeline (TNGP) project, aimed at leveraging Nigeria's abundant gas resources for power generation and domestic consumption. [6] Furthermore, the TNGP project is part of a larger vision that includes the proposed 4,401km-long Trans-Saharan Gas Pipeline (TSGP), which aims to export Nigerian natural gas to customers in Europe. [7] This demonstrates Nigeria's ambition to play a significant role in the global gas market and highlights its commitment to economic growth and development.

Scheduled for completion in July 2024, the AKK pipeline is projected to significantly enhance domestic and regional gas utilisation, particularly for power generation and industrial development. The project includes plans to process hydrocarbon liquids at Ajaokuta, producing LPG, while the bulk of the gas will be transported to supply feedstock for new power plants and petrochemical facilities in Abuja, Kaduna, Kano, and Katsina. This strategic infrastructure investment is poised to stimulate economic growth, improve energy access, and drive industrialisation in Nigeria. [8]

2. Escravos-Lagos Pipeline System (ELPS)

The Escravos-Lagos Pipeline System (ELPS) is a critical component of Nigeria's gas infrastructure, facilitating the transportation of natural gas from the Niger Delta to various consumption areas, including power plants in the South-West region of the country. It is operated by the Nigerian Gas Company Limited, and has a capacity of 1.1 billion standard cubic feet (1.1BSCF) of gas per day. [9]

The ELPS, a 36-inch pipeline constructed in 1989, plays a key role in supplying gas to support industrial and commercial activities. While the pipeline begins at the Nigerian Gas Company's gas treatment plant in Warri, the gas originates from Chevron's Escravos gas plant in Delta State. In addition to supplying gas to power plants in the South-West, the ELPS also feeds into the West African Gas Pipeline System, which is part of the broader Nigeria-Morocco Gas Pipeline project (which is also referred to as the Trans-Saharan Gas Pipeline). [10]

In line with Nigeria's commitment to enhancing its gas transportation infrastructure, the ELPS underwent a significant expansion. The construction of the Escravos–Lagos Pipeline System II, announced in April 2019 and completed in February 2021, effectively doubled the pipeline's production capacity to 2.2 billion standard cubic feet of gas per day (2.2BSCF/D). [11]

This infrastructure plays a vital role in supporting industries reliant on natural gas as a primary energy source, and demonstrates Nigeria's commitment to enhancing its gas transportation infrastructure, thereby contributing significantly to economic growth and industrialization.

3. Obiafu - Obrikom - Oben Gas Pipeline Project

The Obiafu-Obrikom-Oben (OB3) Gas Pipeline, also known as the East-West pipeline, stretches from the Obiafu-Obrikom gas plant near Omuku, Rivers State, to Oben, Edo State. It is owned by NNPC and operated by the Nigerian Gas Company. [12] This pipeline has the capacity to produce 2 billion standard cubic feet of gas per day (2BSCF/D). The OB3 Gas Pipeline Project stands as one of the largest gas transmission pipelines in Nigeria and Africa, distinguished by its impressive 48-inch diameter and 127-kilometre length. Additionally, the project features an associated Gas Treatment Plant (GTP) capable of producing 2 billion standard cubic feet of gas per day (2BSCF/D). [13]

The OB3 gas pipeline project is designed to supply the Assa North-Ohaji South (ANOH) gas project, a significant greenfield gas condensate development venture operated by Seplat Energy PLC. [14] The ANOH project aims to produce 300 million standard cubic feet of gas per day (300MMSCF/D), supporting the domestic market and generating an equivalent of approximately 2.4 gigawatts of electricity for the country.[15] The ANOH Project is also a key gas infrastructure in the Decade of Gas.

These strategic pipeline projects represent Nigeria's commitment to commercialising and industrialising its gas resources, as it will facilitate the transportation of natural gas essential for various industrial activities, particularly power generation, upon completion.

4. NLNG Train 7

Nigeria LNG Limited (NLNG) stands as one of the world's premier LNG suppliers, leveraging Nigeria's abundant natural gas resources. Established on May 17, 1989, NLNG was tasked with producing Liquefied Natural Gas (LNG) and Natural Gas Liquids (NGLs) for export. The NLNG Train 7 Project represents a pivotal expansion endeavour, set to augment production capacity by 35% from the current 22 Million Tonnes Per Annum (MTPA) to 30 MTPA. [16]

This expansion is poised to solidify Nigeria's position as a leading, dependable, and favoured LNG supplier in the continuously expanding energy landscape. While the Final Investment Decision was made in 2019, predating the declaration of the Decade of Gas by former President Muhammadu Buhari, it was not until June 2021, following the announcement of the Decade of Gas, that the construction of Nigeria LNG Limited's (NLNG) Train 7 project was thereafter inaugurated by him.[17]

The Train 7 project signifies substantial growth for Nigeria's oil and gas sector, with an anticipated investment exceeding $10 billion encompassing both Train 7 and the upstream segment of the LNG value chain. This initiative is expected to unlock new development prospects within the industry, bolstering Nigeria's Foreign Direct Investment (FDI) profile and instilling confidence in foreign investors.[18]

The NLNG Train 7 Project aligns perfectly with Nigeria's Decade of Gas initiative, which aims to leverage the country's abundant natural gas resources for economic development and industrialization. By increasing LNG production capacity, the project contributes directly to the goals of the Decade of Gas by promoting gas as a key driver of economic growth, diversification, and energy security.

Furthermore, the investment in the NLNG Train 7 Project demonstrates Nigeria's commitment to developing its gas sector and expanding its LNG export capabilities. This not only enhances Nigeria's position as a major LNG supplier but also supports the country's efforts to reduce gas flaring and monetize its gas resources more effectively.

It is safe to say that the NLNG Train 7 Project is a key component of Nigeria's strategy to maximise the benefits of its gas resources and drive sustainable development across various sectors of the economy, in line with the objectives of the Decade of Gas.

5. Floating Liquefied Natural Gas Project in Nigeria

A floating LNG (FLNG) is an LNG plant constructed on a ship or a barge which has LNG storage and offloading facilities.[19] FLNGs produce, liquefy, store and transfer liquefied natural gas via carrier ship to the mainland where both the market and the money is based. [20]

In 2023, the Nigerian National Petroleum Corporation (NNPC) and UTM Offshore signed a Heads of Terms (HoT) agreement for the construction of Nigeria's first indigenous floating LNG project. This agreement considered a significant step toward bolstering Nigeria's energy security and promoting the utilisation of its abundant gas resources, was signed on 20 July 2023 in Abuja. [21] Similarly, in December 2023, UTM Offshore, NNPC Limited, and the Delta State Government signed an agreement regarding Nigeria's first floating LNG (FLNG) project. The planned vessel will have a capacity to handle 1.8 billion metric tons per year for both domestic supplies and exports. The Final Investment Decision (FID) is expected to follow shortly, with construction set to begin in 2024. [22]

It is also noteworthy to highlight that Wison and NNPC signed a Memorandum of Understanding (MoU) at COP28 in Dubai on December 6, 2023. The agreement will see the two companies work together to chart a roadmap for the FLNG project development, ultimately leading to an investment decision. [23]

The agreement between NNPC and UTM Offshore for the construction of Nigeria's first indigenous floating LNG project represents a significant milestone in the country's efforts to commercialise and industrialise its gas sector. This project is in line with the goals of the Decade of Gas initiative, which seeks to leverage Nigeria's abundant gas resources for economic development and industrialization.

The floating LNG project will allow Nigeria to monetize its gas resources more effectively by converting them into LNG for both domestic use and export. This will not only help to meet the country's energy needs but also position Nigeria as a major player in the global LNG market, contributing to economic growth and job creation.

Furthermore, the signing of the above agreements demonstrate the commitment of the Nigerian government and NNPC to developing the country's gas sector and attracting investment in the industry. By partnering with UTM Offshore and other stakeholders, Nigeria is taking concrete steps towards realising the objectives of the Decade of Gas and unlocking the full potential of its gas resources for the benefit of its economy and people.

6. The Maiduguri Emergency Power Project (MEPP)

The Maiduguri Emergency Power Project represents a crucial initiative aimed at providing reliable and sustainable electricity to Maiduguri, the capital of Borno State, and its surrounding areas. This project is not only essential for meeting the energy needs of the region but also aligns with the Federal Government's commitment to deepening gas utilisation in Nigeria's domestic markets, as outlined in the "Decade of Gas" (2021-2030) declaration. By leveraging domestic gas resources for power generation, the MEPP contributes to the overall goal of improving access to electricity and stimulating economic activities in Maiduguri and across Borno State. [24][25]

The MEPP's significance extends beyond electricity provision, as it is part of a broader strategy to enhance domestic gas utilisation, reduce gas flaring, and promote economic development in the region. This project exemplifies the government's proactive approach to addressing energy challenges while supporting sustainable development goals. As the MEPP progresses, it is expected to have a positive impact on the socio-economic landscape of Maiduguri and Borno State, demonstrating the transformative potential of strategic energy infrastructure projects in Nigeria.

CHALLENGES AND OPPORTUNITIES

The development of gas infrastructure in Nigeria, despite its potential impact, has faced several challenges that have hindered progress. These challenges include inadequate funding, which has resulted in delays and multiple missed deadlines for gas infrastructure projects. Additionally, the country's security concerns, including pipeline vandalism and attacks on infrastructure, have contributed to the slow development of gas infrastructure.

Furthermore, while the Petroleum Industry Act prohibits gas flaring, there is still a limited gas gathering and distribution network in Nigeria. This limitation is primarily due to the high cost of gas infrastructure projects and the need for significant investment in infrastructure development. Additionally, the lack of adequate infrastructure has led to inefficiencies in the gas supply chain, hindering the country's ability to fully utilise its gas resources, especially in addressing its energy poverty.

Despite these challenges, there are significant opportunities for Nigeria in the commercialization and utilisation of gas, as outlined in the Decade of Gas initiative. Utilising gas in the economy can improve the power sector, increase domestic gas consumption for cooking and transportation, and provide industries with a reliable and cost-effective energy source. By addressing these challenges and leveraging these opportunities, Nigeria can further develop its gas sector and realise the benefits of the Decade of Gas initiative.

CONCLUSION

In the journey from policy to pipeline, Nigeria's gas sector has witnessed a transformative decade marked by significant strides in policy, legislation, and infrastructure development. The declaration of the 2020s as Nigeria's Decade of Gas set the stage for a renewed focus on gas as a catalyst for industrial growth, underscored by key initiatives such as the Petroleum Industry Act and the Nigerian Energy Transition Plan. These policy and regulatory changes have laid a solid foundation for advancing the industrialisation and commercialisation of Nigeria's economy through the sustainable development of its gas resources.

The implementation of major gas infrastructure projects like the AKK Gas Pipeline, ELPS, and NLNG Train 7 reflects Nigeria's commitment to expanding its gas sector and enhancing energy security. Despite facing challenges such as funding constraints and security risks, Nigeria has positioned itself as a key player in the global gas market. Looking ahead, sustained investment in infrastructure, continued policy support, and collaboration between the public and private sectors will be crucial in realising the full potential of Nigeria's gas sector, driving economic growth, and ensuring a sustainable energy future.

REFERENCES

1. https://energy-utilities.com/assessing-the-first-years-of-nigeria-s-decade-of-news122255.html accessed on 19 February, 2024

2. https://www.energytransition.gov.ng/natural-gas/ accessed on 19 February, 2024.

3. Ibid

4. https://ngfcp.nuprc.gov.ng/about-ngfcp/ accessed on 19 February, 2024.

5. Ibid

6. https://pemedianetwork.com/petroleum-economist/articles/midstream-downstream/2024/nigeria-s-biggest-gas-pipeline-advances/ accessed on 19 February, 2024.

7. https://www.nsenergybusiness.com/projects/ajaokuta-kaduna-kano-akk-gas-pipeline/ accessed on 19 February, 2024.

8. Supra

9. https://www.gem.wiki/Escravos%E2%80%93Lagos_Pipeline_System

10. Ibid

11. Ibid

12. https://nairametrics.com/2023/09/29/nnpcl-gas-petroleum-ministers-assure-of-ob3-gas-pipeline-completion/#:~:text=The%20Obiafu%2FObrikom%2FOben%20 accessed on 20 February, 2024.

13. https://www.gem.wiki/Obiafu-Obrikom-Oben_Gas_Pipeline accessed on 18 February, 2024.

14. https://www.seplatenergy.com/our-company/our-operations/midstream-gas/anoh-gas-processing-plant/ accessed on 20 February, 2024.

15. https://anohgas.com/anoh-field/ accessed on 20 February, 2024.

16. https://www.nigerialng.com/Train7-Project/Pages/Background.aspx accessed on 21 February, 2024.

17. Ibid

18. Ibid

19. https://www.chiyodacorp.com/en/service/offshore/ accessed on 20 February, 2024.

20. https://www.oilandgasiq.com/fpso-flng/articles/guide-to-flng accessed on 20 February, 2024.

21. https://www.offshore-energy.biz/nnpc-and-utm-offshore-ink-deal-on-nigerias-first-indigenous-floating-lng-project/ accessed on February, 2024.

22. https://www.offshore-mag.com/vessels/article/14303007/nigerias-first-flng-project-close-to-fid accessed on 20 February, 2024.

23. https://www.offshore-energy.biz/nnpc-teams-up-with-wison-for-floating-lng-project-in-nigeria/ accessed on 20 February, 2024.

24. https://nnpcgroup.com/ accessed on 20 February, 2024

25. https://x.com/nnpclimited/status/1631353485504524290?s=46&t=y0lLsWAKUISw-yzLf93qSQ accessed on 19 February, 2024.