At least, 20 per cent of associated gas produced yearly in the country is still being flared, enough to generate 6,000 megawatts (Mw) of electricity, the Managing Director, Energy and Mineral Resources Limited (EMR), Abiola Ajayi, has said.
Ajayi, who spoke to The Nation, said the yearly gas production stands at about 1.8 trillion standard cubic feet (tcf).
He stressed the need for more investments in the sector to monetise the gas instead of burning it.
He said International Oil Companies (IOCs) have failed to contribute to the domestic gas obligation, which has adversely affected output of the power plants in the country.
He said the power sector, which requires about 70 per cent of gas produced for local consumption could not afford a market driven price, which is the reason for the unwilling disposition of the IOCs to commit to domestic supply.
Ajayi said for the country to achieve 20,000Mw generation by 2020, gas required for open cycle power plants is at least 4.5 billion standard cubic feet per day (bscf/d), and 3.5 bscf/d for combined cycle plants.
He also said for the Nigerian Gas Master Plan to succeed, the oil and gas producers must set aside a pre-determined amount of gas reserves and production for the domestic market.
Also, they must comply with their obligations or face penalty for gas undersupply, and restrict export of produced gas.
He said categorisation of the domestic gas market into domestic, industrial and commercial, would form the basis for the pricing framework, which according to him will determine the fair price for the various sectors.
He advised that the Minister of Petroleum Resources be empowered to stipulate the requisite amount of gas to be set aside periodically by the international oil companies for a period of between five and seven years.
Ajayi called for the establishment of a gas department within the Ministry of Petroleum Resources to oversee the execution of this regulation in accordance with the Department of Petroleum Resources (DPR).
He said for gas supply to be sustainable, the government must ensure, among other things, a bankable commercial framework, gas investment drive, and address the issue of pipeline vandalisation as well as pricing based on willing-buyer-willing-seller.
“Resolution of issues of gas policy, gas pricing, tariff structures and privatisation will drive the requisite levels of foreign direct investment into the sector,” he added.
Again, building smaller power plants close to gas pipeline routes (embedded generation), realistic enforcement of gas flares sanction policy as well as frequent licensing rounds, he said.
According to him, the challenges of gas supply shortage will require at least five years of significant investments in gas production and infrastructure development, adding that delivering constant power supply to the people would not happen overnight
He said there was the need to look towards renewable energy sources based on an integrated resource plan for a more sustainable energy generation landscape, adding that the 20,000Mw power target cannot be easily achieved relying on upstream sources alone.
This, according to him, would take care of off-grid rural area energy demand with the right combination of proper energy storage, policy and fiscal framework.