Page 5 - AfrOil Week 03 2021

AfrOil COMMENTARY AfrOil

Under these perfect storm conditions, every oil were not able to achieve their aim of passing the
and gas producer suffered – and Nigeria was Petroleum Industry Bill (PIB) before the end of
certainly no exception. State-owned Nigerian the year and partly from fears that the new law
National Petroleum Corp. (NNPC) found itself did not do enough to address local or foreign
struggling to sell all of its oil cargoes, even after investors’ concerns.
offering steep discounts on prices that were
already low. NLNG, in which NNPC is the larg- Next steps
est single shareholder, was in a similar situation, But do these challenging moments indicate that
as it couldn’t find enough customers to take Nigeria’s gas policy is a failure?
delivery of its unsold LNG. In turn, the Nige- Not necessarily. There have been notable
rian government saw its oil and gas revenues fall, successes during the “Year of Gas,” such as the
constrained by low demand and low prices. launch of construction work on the Ajaoku-
ta-Kaduna-Kano (AKK) pipeline, which will
FID and policy problems support domestic gasification and gas-to-power
At the same time, poor conditions led interna- initiatives. Likewise, the government’s efforts to
tional oil companies (IOCs) to put some of their promote the use of LPG produced from natural
plans for launching new upstream projects on gas as a fuel for cooking, home heating and other
hold. France’s Total, for instance, said the pan- purposes have had good results, and the domes-
demic and low prices had influenced its decision tic LPG market is growing.
to delay a final investment decisions (FID) on Meanwhile, the Nigeria LNG (NLNG)
the Preowei deepwater field. consortium, which supplies about half of the
In turn, this delay and others like it forced a country’s LPG, has taken an FID on the Train Nigeria has had
review of Nigeria’s production forecasts. They 7 expansion project. This initiative is slated to some notable
inevitably led to the conclusion that natural push the total production capacity of the group’s
and associated gas output wasn’t likely to rise liquefaction plant on Bonny Island up from successes during
as quickly as previously anticipated, and this 22.5mn tonnes per year to 30mn tpy.
meant that the timetable for domestic gasifica- On a more abstract level, Nigeria’s govern- the “Year of Gas”
tion projects had to be altered as well – on top of ment has also reiterated its commitment to
the adjustments that were already being made in boosting the gas industry by building up domes-
light of low prices (and uncertainty about when tic demand and not by putting export-oriented
global demand might reach equilibrium again). projects front and centre. That is, officials in
Meanwhile, there were policy considera- Abuja have said they want gas to help drive the
tions that led IOCs to question their commit- expansion of the rest of the economy, by facilitat-
ment to Nigeria. Early in the year, for example, ing the generation of electricity for business and
there were concerns about the Deep Offshore residential users and by serving as a fuel for large
and Inland Basin Production-Sharing Contract manufacturing facilities.
Act, adopted in late 2019, since officials in Abuja To succeed on this front, Nigeria will need
appeared to see the law as a means of extracting to push more upstream, midstream and down-
more money from investors retroactively. stream projects forward and continue to move
Then in the first seven months of the year, ahead with policy reforms and the adoption of
there were concerns about the fact that the the PIB. It should also remain focused on the
Nigerian government had still not managed domestic market, since the course of global
to uphold its pledge to submit a new oil law to energy demand is still uncertain.
Parliament. The Buhari administration did meet If it does, then it may be able to say in the
this milestone in August, but concerns have not future that Sylva’s “Year of Gas” was just the
been fully allayed – partly because legislators beginning. ™

Nigeria is encouraging industrial cnsumers to use gas (Photo: SNG)
Nigeria is encouraging industrial cnsumers to use gas (Photo: SNG)

Week 03 20•January•2021 www. NEWSBASE .com P5