NLNG contributes 7% to GDP, says MD

THE PUNCH Newspaper- Martin Ayankola

THE Managing Director, Nigeria LNG Limited, Mr. Chima Ibeneche, has said that the company‘s current gas export revenue represents about seven per cent of Nigeria‘s Gross Domestic Product.

He said, while speaking at the Nigeria Oil and Gas 2010 conference in Abuja on Tuesday, that the company had also since 2007 commenced domestic supply of liquefied petroleum gas with 150,000 tonnes dedicated to the Nigerian market.

He stated that it demonstrated that the domestic market could reasonably compete with the international market if appropriate incentives were made available.

Ibeneche said that it was true that some domestic natural gas buyers like industrial consumers had already achieved and in some cases had surpassed price parity with export projects.

He added, ”One approach therefore will be to develop integrated projects which combine domestic and export gas supply and may well incorporate a domestic power plant. In this way, revenue stream from export gas will help subsidise domestic supply requirements that are below export price parity especially in power generation.”

Ibeneche added that the company with an installed capacity of 22 metric tones per annum mtpa, was the only operational LNG facility and one of the fastest growing LNG facilities in the world, expanding rapidly from two trains in 1999 to six trains in 2007.

Ibeneche stated that the seventh train was currently awaiting final investment decision

He said, ”When other LNG projects on the drawing table are considered and if actualised, Nigeria could become one of the three top LNG producers in the world, after only Qatar and Australia reaching over 60 mtpa of LNG liquefaction capacity.”

Ibeneche said attaining the target would require overcoming the challenges currently confronting the gas industry in Nigeria.

According to him, the key amongst these challenges included funding, fiscal, commercial and regulatory issues as well as security and safety of personnel and assets.

He said that the Petroleum Industry Bill had set out laudable objectives which included a comprehensive reform of the upstream energy business which reforms would include changes to the Nigerian National Petroleum Corporation and the establishment of Incorporated Joint Ventures to carry on the upstream energy operations.

”The Incorporated Joint Venture is a model that has worked well for Nigerian LNG especially in terms of raising funds and speedy decision making. Clearly, open dialogue and transparent engagement by all stake holders will be crucial in reaching a satisfactory landing and enactment of the Petroleum Industry Bill into law,” he stated.

Ibeneche said there was no doubt that commerciality of domestic gas supply was essential to attracting necessary investment for that sector.

According to him, the right incentives will remove the preference of project developers for export projects saying this has been demonstrated by Nigeria LNG‘s supply of LPG into the domestic market.

He said, ”I must not fail to mention the Gas Master Plan. The government has launched this plan to address the under-development of the Nigerian gas sector - with particular emphasis on domestic gas consumption. The plan seeks to satisfy the acute domestic shortage of gas and realise efforts to improve power generation and help raise generation capacity to 6,000 megawatts.”

”The Gas Master Plan comprises: the Gas Pricing Policy, which provides a framework for the minimum price that any purchaser of gas can be charged; the Domestic Reserves Obligation, which aims to ensure the availability of gas for domestic consumption in order to stimulate economic growth; and the Gas Infrastructure Blueprint; which provides for the establishment of a network of gas hubs which would ultimately reduce the cost of supplying gas within Nigeria,”Ibeneche added.

He said that the Nigerian gas industry was rapidly evolving not only as a catalyst for national development but also helping to meet global demand and National GDP growth.

”There is no doubt that there are sufficient gas reserves in Nigeria that can effectively meet both the international and domestic supply/demand needs. What has been lacking over the years is an effective strategy, necessary structure and incentives as well as an integrated pipeline network to enable delivery of domestic gas. It is my hope that these matters will be resolved satisfactorily for all stakeholders in both the Petroleum Industry Bill and the Gas Master Plan,” he added.


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