Page 19 - AfrOil Annual Review 2021

AfrOil AUGUST AfrOil

Nigeria did chalk up a few notable successes, operations for the purposes of tax.”
such as the announcement of a final investment However, Ian Simm, principal advisor at the
decision (FID) on NLNG’s Train 7 project in IGM Energy consultancy, believes that Nige-
January 2020, but other projects encountered ria may already be getting ahead of itself with
challenges and delays because of the pandemic. Minister of State for Petroleum Resources.
Nevertheless, Buhari remained convinced He pointed to Minister of State for Petroleum
of the need for Nigeria to concentrate more on Resources Timipre Sylva’s recent suggestion that
gas than on oil, and in late March of this year, he plans for extending the AKK pipeline across the
unveiled an even more ambitious plan. During Sahara to begin piping gas to Europe might be
the pre-summit conference of the Nigeria Inter- revived. (Sylva told the press in late June: “The
national Petroleum Summit (NIPS) in Abuja, plan is if we can get it to Kano, then it can con-
he announced that the 2021-2030 period would tinue all the way to Algeria at the Trans-Saharan
be known as “The Decade of Gas” and said that gas pipeline and then link up with the Algerian
the government would use this time to make gas pipeline and then we move it to Europe.”)
available across the country. Simm expressed scepticism, saying: “While
The programme envisions full gasification exports to Europe will be appealing, given the
of the Nigerian economy, the president said at patchiness of domestic gas and electricity con-
the pre-summit conference and in a subsequent nectivity, Abuja should seek marginal gains
series of Twitter posts. He explained that he locally rather than becoming distracted with a
wanted to see Nigeria extract much more gas pipeline for which it has no way of guaranteeing
and make it available to customers all over the security, particularly when doing this domesti-
country – to businesses and residences for heat- cally has already proven challenging.”
ing, to power plants for electricity generation
and to manufacturers for industrial operations. No guarantee of success
Furthermore, he talked about transforming Idornigie stressed, though, that the PIB would
Nigeria into a gas-powered country and urged not remove all obstacles to domestic gasification
all stakeholders in the industry to work together in Nigeria.
for this purpose. The bill will not, for example, eliminate the
deficiencies in Nigeria’s domestic gas infra-
PIB will support domestic gasification structure, he said. “The lack of gas infrastruc-
The Buhari administration’s support for “The ture will be a big issue for developing offshore
Decade of Gas” has not waned since late March. gas reserves for the domestic market, particu- Nigeria’s new
Officials in Abuja are still talking up the plan and larly non-associated deepwater gas fields,” he
stressing its potential to help the Nigerian econ- told NewsBase. “The proposed midstream petroleum law
omy grow and diversify. infrastructure commission is expected to help
Nevertheless, the initiative has drawn fewer facilitate investment in gas infrastructure, but it establishes
headlines than the PIB. Many local and foreign is still early days, and it is unclear how this new special tax
news agencies have paid closer attention to ques- commission will work.”
tions about how the new oil and gas law will (He was referring to provisions of the bill breaks for gas
affect IOCs (especially those working in the res- that called for establishing the Nigerian Mid-
tive Niger River Delta) than to questions about stream and Downstream Petroleum Regula- development
how to achieve full domestic gasification during tory Authority (NMDPRA), an agency that will
“The Decade of Gas.” govern commercial, operational and technical
But the two issues can’t be separated. The PIB operations in the downstream sector and the
wasn’t drawn up solely for the purpose of pla- midstream sector of the oil and gas industry.)
cating IOCs; it will also affect domestic fuel and Additionally, he pointed out that the pas-
energy markets. Moreover, the new law will pro- sage of the PIB had not assuaged all the doubts
vide some support for the “Decade of Gas” initi- of the IOCs, which are in a better position than
ative, according to Obo Idornigie, vice president Nigerian firms to fund and operate the projects
for sub-Saharan Africa research at Welligence that will provide the additional volumes of gas
Energy Analytics. “We think the PIB offers sup- needed to achieve Buhari’s goals. “[We] think
port to the ‘Decade of Gas’ initiative,” Idornigie material gas production is expected to come
told NewsBase. “For the first time, Nigeria has from the joint venture contracts between the
introduced terms for developing gas under pro- IOCs and NNPC [Nigerian National Petroleum
duction-sharing contracts [PSCs]. This has been Corp.] ... [and] the IOCs are not likely to com-
a sticking point for gas fields under PSCs.” mit to new joint venture projects until they get
He also pointed out that Nigeria’s new petro- clarity on how NNPC will work as a commercial
leum law established special tax breaks for gas entity, plus how their outstanding liabilities will
development. “The PIB is also prioritising gas be paid.”
supply to the domestic market, and incentives In short, the PIB is likely to prove an impor-
to support this initiative have been included in tant source of support for the president’s “Dec-
the document,” he noted. “For example, royalty ade of Gas,” and it aims to create incentives for
[rates] for gas produced and consumed in-coun- gas development projects that will serve the
try [are] 2.5%, versus 5% for export. Operators domestic market. At the same time, though, the
who are developing gas projects solely to supply bill will not guarantee the initiative’s success.
the domestic market can also consolidate the Instead, its impact will only become clear with
midstream capital investment with upstream time. ™

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