Page 5 - DMEA Week 26

DMEA COMMENTARY DMEA

including layers of sand, clay and gravel. launch of a major domestic gas supply project –
These difficulties have arisen, he explained, namely, the construction of the Ajaokuta-Kadu-
because there are no companies in Nigeria that na-Kano (AKK) gas pipeline.
have the right type of horizontal directional drill- When finished, this link will follow a 614-km
ing (HDD) equipment to perform this task. As a route, running northward from the left bank of
result, he noted, Nestoil is looking for a foreign the Niger River in Kogi State to the capital city of
company that can provide a direct pipe facility. Kano State. It is meant to serve as the first section
It has held discussions with HDD Thailand and of the Trans-Nigeria Gas Pipeline (TNGP) but
hopes to strike a deal with the Thai company will also deliver gas to domestic TPPs, thereby
soon, he said. making electricity more widely available.
Bringing the equipment into Nigeria may
take some time because of the travel restrictions The pipeline will have a design capacity of
arising from the coronavirus (COVID-19) pan- 3.5bn cubic feet per day (99.11mn cubic metres
demic, he added. per day, or about 36.175bn cubic metres per
year), and initial throughput will amount to
Downstream consequences 2 bcf per day (56.64 mcm per day, or around
The postponement of the pipeline’s comple- 20.67 bcm per year). As such, it will significantly
tion date represents a setback for the gov- increase the volume of gas available on Nigeria’s
ernment’s gas-to-power programme. The domestic market.
OB3 link was designed to pump stranded gas
from east to west across the Niger River Delta Pricing issues
region, thereby ensuring regular deliveries of Timipre Sylva, Minister of State for Petroleum
feedstock to TPPs in the western part of the Resources, took note of that last week, saying
region. during the opening meeting of a new gas pricing
The delays will also affect Seplat Petroleum, committee that the government had to work to
a local upstream operator that has been hoping support the AKK project. Specifically, he said,
to use the pipe to deliver gas to the 459-MW Abuja must develop a new domestic gas tar-
Azura Edo TPP. Seplat made a final investment iff regime that is agreeable to gas producers, as
decision (FID) on the Anoh project and struck well as industrial gas consumers and residential
a take-or-pay supply deal with the Azura-Edo consumers.
station last year on the basis of expectations that “Without appropriate pricing, we can’t get it
the pipeline would be ready. right,” Sylva was quoted as saying by The Sun.
These problems are reflective of a general “We have to ensure that gas becomes affordable.
slowdown in the gas-to-power programme. It is sad to note that we sell gas cheaply to inves-
Officials in Abuja had said several years ago that tors while the price is high in the domestic mar-
they wanted to add at least 10,000 MW of new ket to the extent that some Nigerians say diesel is
gas-fired generating capacity between 2015 and cheaper than gas.”
2020. In turn, this initiative was supposed to The minister also told the gas pricing com-
support a wider effort to bring the country’s total mittee that it would have 30 days to draw up and
generating capacity up to 40,000 MW, more than submit a report on gas pricing. The document
double the current level, during the same period. should include a review of domestic gas prices
So far, though, work has not proceeded at the and benchmarks and recommendations for pric-
anticipated speed. Nigeria will not meet its tar- ing methods that can accommodate all types of
gets this year. customers, along with evaluations and technical
suggestions.
AKK pipeline progress Yusuf Usman, the committee’s chairman,
Nevertheless, it has not given up hope. On June responded by pledging to uphold all of Abuja’s
30, Nigerian President Muhammadu Buhari requirements. It remains to be seen, though,
attended an onlline ceremony marking the whether this deadline can be met. ™

Week 26 02•July•2020 www. NEWSBASE .com P5