Page 6 - DMEA Week 32 2021

DMEA COMMENTARY DMEA
PIB seen providing support to Nigeria’s “Decade of Gas”
The new oil and gas law aims to address the concerns expressed by IOCs, but it also establishes incentives for delivering gas to the domestic market.
AFRICA
WHAT:
Abuja drew up the PIB partly because it needed to address foreign investors’ concerns about contracts, transparency, risk and other issues.
WHY:
The bill also includes provisions that will offer concrete support to domestic gasification plans.
WHAT NEXT:
These provisions do not guarantee success for “The Decade of Gas.”
WHEN Nigerian President Muhammadu Buhari launched a major push for the passage and adoption of a new petroleum law last year, he had multiple reasons to do so.
One of the most important of these was the need to address the concerns that IOCs had expressed about Nigeria. These IOCs, including long-time investors such as Eni (Italy) and Royal Dutch Shell (UK/Netherlands) were worried about the country’s commitment to improv- ing transparency and ensuring the stability of contracts.
They fretted about the progress of efforts to deter corruption, the risks of working in onshore areas populated by communities at odds with the federal government, investments in infrastructure and other issues. They did so frequently enough and loudly enough that industry observers started warning that Nigeria might lose investment to other countries unless it took action.
The Buhari administration certainly heeded that warning. It submitted the Petroleum Indus- try Bill (PIB) to both houses of the National Assembly in August 2020 and finally succeeded in securing the passage of the legislation in the third reading in mid-July of this year. The bill is now due to be submitted to Buhari, and the pres- ident is expected to sign it into law in the near future.
This has the potential to be good news for IOCs working in Nigeria (or hoping to do so), though it will take time to determine whether the PIB lives up to its promise. But it may also give a boost to Nigeria’s domestic fuel and energy sector, in the form of support for domestic gasi- fication initiatives.
Another ambitious initiative
Buhari has voiced strong support for plans to promote the development of the country’s domestic natural and associated gas resources.
In late 2019, he declared that the time had come to focus on gas, asserting that Nigeria was not an oil-producing state but rather a gas- rich state that also happened to produce oil. He declared 2020 “The Year of Gas” and touted his administration’s support for a number of
ambitious initiatives, including the construction of the Ajaokuta-Kaduna-Kano (AKK) pipeline, a domestic gas supply link, and the building of a seventh production train for the Nigeria LNG (NLNG) consortium.
This initiative did not live up to its full poten- tial, largely because of economic and logistical disruption stemming from the coronavirus (COVID-19) pandemic. Nigeria did chalk up a few notable successes, such as the announcement of a final investment decision (FID) on NLNG’s Train 7 project in January 2020, but other pro- jects encountered challenges and delays because of the pandemic.
Nevertheless, Buhari remained convinced of the need for Nigeria to concentrate more on gas than on oil, and in late March of this year, he unveiled an even more ambitious plan. During the pre-summit conference of the Nigeria Inter- national Petroleum Summit (NIPS) in Abuja, he announced that the 2021-2030 period would be known as “The Decade of Gas” and said that the government would use this time to make gas available across the country.
The programme envisions full gasification of the Nigerian economy, the president said at the pre-summit conference and in a subsequent series of Twitter posts. He explained that he wanted to see Nigeria extract much more gas and make it available to customers all over the country – to businesses and residences for heat- ing, to power plants for electricity generation and to manufacturers for industrial operations. He talked about transforming Nigeria into a gas-powered country and urged all stakeholders in the industry to work together for this purpose.
Supporting domestic gasification
The Buhari administration’s support for the Decade of Gas has not waned since late March. Officials in Abuja are still talking up the plan and stressing its potential to help the Nigerian econ- omy grow and diversify.
Nevertheless, the initiative has drawn fewer headlines than the PIB. Many local and for- eign news agencies have paid closer attention to questions about how the new oil and gas law will affect IOCs (especially those working in
P6
w w w . N E W S B A S E . c o m Week 32 12•August•2021