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Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
Naice 2010 SPE powerpoint
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Naice 2010 SPE powerpoint

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  • 1. Nigerian Gas Master-Plan and Policy: Is it a Constrained Energy Policy? Humphrey Onyeukwu, The Lagos Oil Club
  • 2. Outline
    • Overview of Nigerian Gas Sector
    • Evolution of Gas Utilization and Policies in Nigeria
    • Nigerian Gas Master-Plan – Key Objectives
    • Elements of the Nigerian Gas Master-Plan
    • Analysis of the Nigerian Gas Master-Plan
    • Conclusion
  • 3. OVERVIEW OF NIGERIAN GAS SECTOR
    • Nigeria has huge gas reservoir reputed to be the 7 th largest in the world
    • Gas reserves estimated to be up to 600TCF with about 185TCF being proved reserves*.
    • The gas resources are largely unexploited. Daily production is 4.6bcf/d and about 55%(2.1bcf/d) of the daily production are split between re-injection, NLNG feedstock, internal fuel usage and a small quantity marketed.
    • The effect of the unexploited gas is at a huge cost to the economy. The gross monetary value is about US$2.billion and the environmental impact at 70million tons of CO2 emissions per year
    • * Based on IHS Energy Yr. 2004 estimates
  • 4. OVERVIEW OF NIGERIAN GAS SECTOR
    • Proved Reserves of 184 TCF with AG = 95TCF, NAG = 89TCF
    • Growth in the gas reserves linked to Crude Oil reserves growth.
    • The gas found in Nigeria is of high grade quality, low in sulphur and rich in liquid.
  • 5. Evolution of Gas Utilization and Policies in Nigeria
    • The Demand Constrained Era (Pre-1999 Period)
    • The NLNG Era (1999 – 2005 Period)
    • The Demand Boom/Supply Constrained Era (Post – 2005 Period)
  • 6. Evolution of Gas Utilization and Policies in Nigeria
    • The Demand Constrained Era (Pre-1999 Period)
    • Period marked by intense gas flaring and the market focus of most exploration companies was export-oriented.
    • The domestic gas market was greatly underdeveloped and demand constrained by poor state of infrastructure and limited storage capacity
    • Feeble Government attempts at ameliorating the extent of the financial loss and environmental impact of flared gas
  • 7. Evolution of Gas Utilization and Policies in Nigeria
    • The Demand Constrained Era (Pre-1999 Period)
    • The initial regulatory measures at checking flared gas and encourage gas utilization include:
      • Regulation 42, Petroleum (Drilling and Production) Regulations (Pursuant to the Petroleum Act) mandates the Oil Companies to deliver programmes to the Minister for the utilization of associated gas discovered in their fields within 5 years of putting such field into production.
      • Associated Gas Re-Injection Act imposed a mandatory requirement of Oil Companies to submit programmes of utilization of associated gas and re-injection of gas not required for any industrial project. Flaring is allowed subject to the consent of the Minister and penalties .
  • 8. Evolution of Gas Utilization and Policies in Nigeria
    • The NLNG Era (1999 – 2005 Period)
    • Marked by the kick-off and subsequent growth of Liquefied Natural Gas (LNG) and new projects in Gas-to-Liquid Plants.
      • Examples, NLNG Project, Bonny (now in its 7 th train), US$3.5billion Brass LNG, US$7billion OKNLG, West African Gas Pipeline project.
    • Steady decline in gas flares through the Government Flare-Out policy directives
      • - Different target dates have been set for a Zero Gas Flare directive. Fixed severally at 1 st January 1994, 31 st December 2008 and now speculated at 2011.
  • 9. Evolution of Gas Utilization and Policies in Nigeria
    • The Demand Boom/Supply Constrained Era (Post – 2005 Period)
    • Boom in demand from both the Domestic and Export sectors
    • Divers of this Boom include:
    • - Rising gas price in key export markets
    • - Declining reserves in other gas provinces propelling resort to reserve-rich low cost countries like Nigeria, Egypt, Trinidad & Tobago
    • - Aggressive Power Sector reforms
    • - The Nigerian Gas Master Plan and Policy
  • 10. The Nigeria Gas Master Plan and Policy (NGMP)
    • Key Objectives:
      • Prescribes an appropriate natural gas strategy
      • Create a viable market structure for the development of the Downstream Gas sector in Nigeria
      • Increase private sector participation and minimize public sector investment in infrastructure
      • Develop a legal, regulatory and policy framework for safe and profitable private sector investment in the Gas sector
  • 11. Elements of Nigeria Gas Master Plan and Policy
    • Critical Elements of the Gas Master-Plan
    • - The National Domestic Gas Supply and Pricing Policy
    • - The Nigeria Gas Infrastructure Blueprint
  • 12. Elements of Nigeria Gas Master Plan and Policy
    • National Domestic Gas Supply and Pricing Policy :
    • - The Domestic Gas Supply Obligations requires mandatory reserve allocation by the international oil companies for the domestic sector.
    • - The regulation stipulates meeting domestic supply obligation as a condition for the export of gas by the IOCs.
    • - A Domestic Gas Aggregator to manage the domestic supply regime and acts as intermediary between the gas producers and wholesale gas purchasers.
  • 13. Elements of Nigeria Gas Master Plan and Policy
    • Gas Pricing Framework
    • The Pricing Policy adopts a gas pricing framework that categorizes the demand sector into three strategic sectors and applies appropriate pricing regime for these strategic demand sectors groupings.
    • The strategic sectors are:
      • Strategic Domestic Sector: composed of industries that have significant direct multiplier effect on the economy like the Power (residential and light commercial users), domestic fertilizer.
      • Strategic Industrial Sector: made up of industries that utilize gas as feedstock in the creation of new products, e.g. fertilizer, methanol and GTL
      • Other Commercial Sector: which refer to the sector that uses gas as industrial fuel, e.g. manufacturing industries, Cement, Steel, CNG, domestic industries etc.
  • 14. Elements of Nigeria Gas Master Plan and Policy
    • Gas Pricing Framework
    • The gas pricing framework stipulates the threshold prices for each of the strategic groupings.
    • The actual prices will be negotiated between the parties as only the floor prices is suggested under the pricing framework.
  • 15. Elements of Nigeria Gas Master Plan and Policy
    • The Nigeria Gas Infrastructure Blueprint
    • designed as an integrated infrastructure strategy to support the domestic, regional and export LNG markets.
    • It ensured connectivity between major gas reserves sources and the demand centers through the Central Processing Facilities (CPFs).
    • The CPFs serve as major gas hubs where wet gas from the gas fields are treated and processed to provide a flexible supply grid nationwide and facilitate more flexibility in gas supply deliverability across the country.
    • Leveraging on existing synergies between the JVs and reduce overall cost of infrastructural development.
  • 16. Elements of Nigeria Gas Master Plan and Policy
    • The Nigeria Gas Infrastructure Blueprint
    • It provided 3 major domestic gas transmission systems in Nigeria:
      • The Western System comprising the existing Escravos Lagos Pipeline System (ELPS) and a new offshore extension to Lagos.
      • The South-North gas transmission line. This will take dry gas from the Akwa Ibom/Calabar facility to Ajaokuta, Abuja, Kano, Katsina. The line will also serve the Eastern states of Anambra, Abia, Ebonyi, Ebonyi, Enugu and Imo
      • An inter-connector that links the Eastern gas reserves centre with the 2 transmission systems above
  • 17. Elements of Nigeria Gas Master Plan and Policy
    • The Nigeria Gas Infrastructure Blueprint
  • 18. Analysis of The Nigerian Gas Master-Plan
    • What is the Current Situation?
    • What are the Constraining Factors?
    • Is it the elixir for Nigeria’s domestic gas development?
  • 19. Analysis of The Nigerian Gas Master-Plan
    • What is the Current Situation?
      • The Petroleum Industry Bill (PIB) currently under the deliberation has adopted provisions to strengthen the Gas Master-Plan.
      • Short listing of 15 companies -Gazprom, BG, Shell, Centrica, EoN, Statoil Hydro and Chevron etc. in the $30billion development of the infrastructure blueprint
  • 20. Analysis of The Nigerian Gas Master-Plan
    • Constraining Factors:
    • The availability of gas for domestic utilization due to the export orientation of the major players in the Industry.
      • Balancing gas supply for domestic use with competing export market
      • Potential resistance from the IOCs because of natural bias for the export market
  • 21. Analysis of The Nigerian Gas Master-Plan
    • Constraining Factors:
    • Table shows that though the IOCs post-1999 have highly diversified downstream interests, it tend towards LNG/export market.
    • Structural weakness issues like inflexible structure of Nigerian gas market, infrastructure control and 3 rd party access
  • 22. Analysis of The Nigerian Gas Master-Plan
    • Constraining Factors: Culled from NNPC Annual Statistical Bulletin 2007
  • 23. Analysis of The Nigerian Gas Master-Plan
    • Constraining Factors:
    • Affordability and Commerciality of Supply
      • The staggering nature and complexity of the gas value chain makes it economically inefficient
      • The varying demand capacities of the different sectors and their ability to afford gas
      • Appropriate gas pricing and the affordability of strategic sectors like the Power sector. At present, the total grid capacity in Nigeria, a population of about 140million is 6000MW and only about 4000MW are available.
  • 24. Analysis of The Nigerian Gas Master-Plan
    • Constraining Factors:
    • Absence of a gas-specific legal and regulatory framework
      • - Previous attempts at promulgating the Downstream Gas and the Fiscal Reform Act submitted in 2005 to the National Assembly now subsumed in the PIB.
    • Political Will
    • Derived demand for domestic gas consumption
  • 25. Conclusion
    • The Nigerian Gas Master-Plan and Policy: Is it the elixir for Nigeria’s domestic gas development?
  • 26.
    • THANK YOU!

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