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Natural Gas in Nigeria
Reforming policy, ending flaring and building infrastructure
The natural gas sector is heading for exponential growth as new infrastructure is developed and the government implements zero gas flaring policies. With the largest natural gas reserves in Africa, and ranking seventh in the world, Nigeria is eager to capitalise on this key asset after many years of wasteful flaring from oil fields – according to the 2008 BP Statistical Energy Survey, Nigeria has proven natural gas reserves of 186 trillion cubic metres (Tcf), or almost 3% of the world total. The country’s Master Plan for Gas, drawn up in 2008 and set in motion in 2009, will help it to reap the rewards of a global ‘dash for gas’, while new projects coming online will enable Nigeria’s gas to benefit domestic consumers as well as international buyers.
Gas Policy Reform
In 2008, the government prepared a Gas Master Plan that was intended to promote natural gas production and encourage the supply of natural gas to domestic power stations so as to help alleviate the country’s electricity shortages. The implementation of the Master Plan is under way, and the Petroleum Industry Bill intended to be passed by the end of 2010 includes provisions for supporting the Gas Master Plan. The Bill will establish a gas market aggregator to manage the country’s gas supplies and will require companies to acquire a separate licence for exporting gas. The tax rate for gas will be set at a lower level than that of oil, to encourage the production of natural gas.
One of the major elements holding back the development of the industry was overcome in June 2010, when the government launched a new pricing structure for gas that would see gas prices raised from USD0.20 per million metric BTU to USD1 per million metric BTU. Higher prices will enable gas producers to profit from selling their gas to domestic power supply companies as well as from export, creating incentives for producing gas for the domestic market.
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