1. Tade Oyewunmi
Doctoral Researcher
Center for Climate Change, Energy and Environmental Law
UEF Law School. University of Eastern Finland
Visiting Scholar, University of Houston Law Center, Houston,Texas, USA
TMSL 2015 Energy Symposium, October 1-2, 2015
Texas Southern University, Houston,Texas, USA
01-Oct-15 1

2. I. Introduction
II. The evolving International Gas Market and Nigeria’s Energy Security
III. Policy and regulatory issues in Nigeria’s gas supply to power market
IV. Conclusion
TABLE OF CONTENTS
01-Oct-15 2

3. An on-going research on the legal
and regulatory framework for gas
utilisation in electricity markets in
Nigeria and the EU.
Evolving scenarios and outlook in the increasingly international and
interconnected gas market
• Shale gas revolution, new discoveries in East Africa, Mediterranean
Sea, new LNG deliveries from North America,Australia etc.
• policy and regulatory implications for gas-rich but energy poor
countries like Nigeria
• security of demand vs security of supply issues – incentivising midstream
gas investments and effective regulation – affordability and reliability of
energy supply
• Implications of uncertainties created by prolonged reforms and
regulatory bottlenecks – are developments in the international gas
market impacting and evolving faster than extant legal and regulatory
framework’s capacity and effectiveness?
I. INTRODUCTION
01-Oct-15 3

4.  Global natural gas production has been on the rise, reaching a record high in 2014 (IEA, Natural Gas Information, 2015).
o non-OECD production has doubled since 1994, especially from the Middle east and Asia, with OECD production
increases coming mostly from US and Canada ( e.g. Canada has now overtaken Qatar as the 4th largest producer,
while the US is now the leading oil and gas producer globally)
o Iran’s gas production increased by 6.8% in 2014 alone.
o New gas discoveries and plays in Tanzania, Israel, Mozambique, Egypt etc.
o Demand from non-OECD Europe/Eurasia has been approximately flat over the last 20 years, there was a 1.8%
average annual growth in the OECD, and a 6.4% average in the rest of the world (China and Iran mainly).
 North America switches from being a net importer of energy (oil and gas) to a net exporter (BP Energy Outlook to
2035).
 Global demand for natural gas is projected to outpace other hydrocarbons according to BP’s Energy Outlook to
2035.
o Most of the demand will be met by supplies of conventional gas from Middle east and Russia and unconventional
gas from North America.
o Most of the increase in traded gas will be met by LNG supplies, leading to a more connected and integrated gas
markets and prices across the world.
II.The evolving International Gas Market and Nigeria’s Energy Security
01-Oct-15 4

5. Major global gas trade movements 2014 (billion cubic metres)
5
Source: BP Statistical Review of World Energy 2015
01-Oct-15

6.  What are the implications of these trends and projections on Nigeria’s energy security: security of demand vs
security of supply?
 Does Nigeria’s national energy policy and regulatory framework take due cognisance of these trends and
projections, especially as it relates to her energy security and access?
o Nigeria holds about 180 trillion cubic feet (Tcf) of proved natural gas reserves as of January 2015 (1st in
Africa and 9th globally) (US EIA 2015 Report on Nigeria)
o Nigeria currently flares 20-25% of its gross production largely due to inadequate gas monetisation
infrastructure and a haphazard regulatory framework which is required to enhance investments in domestic
midstream gas sector.
o About 75% - 80% of Nigeria’s power production assets which is now privatised and the sector (power)
currently being liberalised is reliant on secured gas supply.
o Lowest net electricity generation per capita rates in the world (US EIA Report, 2013).
o Nigeria flares more gas than it uses as fuel or supplied through the Nigerian Gas Company (NGC)-
NNPC’s subsidiary responsible for gas transmission, distribution and marketing.
o Does Nigeria’s energy security depend more on the security of demand for its energy resources or a
secured and reliable supply of energy resources locally?
01-Oct-15 6

7. 01-Oct-15 7

8. 0
0.5
1
1.5
2
2.5
3
2012
2011
2010
2009
2008
Billions
Nigeria 2008 – 2012 Gas Production and Utilization outlook (mscf)
Gas Produced Gas Utilised Gas to NGC Gas Flared Gas as Fuel
Source: 2012 NNPC Annual Statistical Bulletin, last modified 20/08/2013
 Gas utilized includes gas to Eleme Petrochemicals, re-injected, NLNG, LPG/NGL for Eleme Petrochemicals, sold to 3rd parties01-Oct-15 8

9. III. Policy and regulatory issues in Nigeria’s gas-to-power market
• Minister of Petroleum
(Minister)/Ministry of
Petroleum Resources
(MPR)
• Department of
Petroleum Resources
(DPR) or Department
of Gas or another?
• Nigerian National
Petroleum Corporation
(NNPC)
Institutions and
Administration
•NGC Limited
•NNPC’s JointVentures
•Other upstream
companies with Gas
reserves
•Nigerian Liquefied
Natural Gas Limited
(NLNG)
•West African Gas Pipeline
Co. Ltd
•Local gas distribution
companies
Gas Sector Operators
• The Petroleum Act, 1969
• The Petroleum (Drilling and
Production) Regulations 1969
• Oil pipelines Act 1956
• National Oil and Gas Policy,
2004
• Nigerian Gas Master Plan, 2008
• National Domestic Gas Supply
and Pricing Policy 2008- National
Domestic Gas Supply and Pricing
Regulations 2008
• The Petroleum Industry Bill,
2008 - 2012
Regulatory framework
01-Oct-15 9

10. The FGN/PTFP
Roadmap for Power
Sector Reform
(Revision 1), 2013
• Power sector reform 2010 milestones
• Gas sector reform (through the Petroleum Industry Bill (PIB)) is an outstanding
issue
• reported challenges: (a) insufficient gas supply/gas pipeline infrastructure to power
plants; (b) increasing debts to upstream and downstream operatives in the gas-to-
power chain; and (c) the unresolved inadequacies in the commerciality of gas-to-
power business
Power sector
Institutions and
administration
•The National Electric Power Policy 2001 and the Electric Power Sector Reform Act
2005
•Ministry of Power
•Nigerian Electricity Regulatory Commission (NERC)
•Nigerian Electricity Management Services Authority (NEMSA)
• Inter-Ministerial Domestic Gas Committee (with membership from the Ministry of
Power, the MPR, upstream gas companies and the Gas Aggregation Company of
Nigeria (GACN)
Will the privatisation and liberalisation of the NESI prompt the required
institutional/regulatory reforms in domestic gas supply?
 Altering institutional settings affects sectoral performance and productivity positively or negatively.
01-Oct-15 10

11. National
Oil and
Gas Policy,
2004
• Separation FGN’s
regulatory, policy and
commercial roles
• Unbundling NGC
• liberalization and third
party access (TPA)
• Gas Masterplan
envisaged
• appropriate gas pricing
framework
 gas monetisation and securing investments in gas supply
 Inability of NNPC to fund its majority share of JV capital expenditure
 ineffectiveness of anti-gas flaring regulations;
 institutional and regulatory inadequacies and ‘opportunism’ by operators;
 uncertainties and opaque framework; NNPC/NGC being directly or indirectly both the
regulator and the regulated;
 unbundling or re-registration of NGC and its capacity to raise finance post-reform???
01-Oct-15 11

12. Key challenges
of domestic gas
sector
Gas availability – balancing accessible resources in the light of growing and
fluctuating demand in the domestic, regional and international markets;
Gas affordability – international and domestic gas pricing and the varying
capacity of domestic gas buyers to pay;
Gas deliverability - Inadequate gas transportation and processing infrastructure;
Establishing an efficient legal and regulatory framework for domestic gas supply
Commerciality of supply – establishing the right commercial (legal and contractual)
framework and environment to guide and secure ex ante and ex post investments in
downstream gas
 Assessing the policy and regulatory issues and energy security
01-Oct-15 12

13. The international gas market is changing and evolving. It portends a significant role for gas utilisation
in global energy trends.
Nigeria needs to put her house (policy and regulatory framework) in order if it will make the best
use of emerging opportunities and mitigate the potential risks to investments and energy security.
o How much of Nigerian gas will be traded globally in the mid to long-term without timely
secured investments in gas exploration and production? and how much of Nigeria’s gas can
operator’s afford to supply to the domestic market under the extant and proposed regulatory
environment? Can Nigerian’s (especially power generators) afford gas supplied at locally
regulated or unregulated (fully-liberalised) market prices?
IV. Conclusion
01-Oct-15 13