Page 5 - AfrOil Week 26

AfrOil COMMENTARY AfrOil

Equipment problems targets this year.
According to Chukweluoka Umeh, Nestoil’s
executive director, the latest delays stem from AKK pipeline progress
the construction of the 1.9-km section of the Nevertheless, it has not given up hope. On June
pipe that will cross the Niger River. 30, Nigerian President Muhammadu Buhari
Business Day quoted Umeh as saying that his attended an onlline ceremony marking the
company was trying to bore an open-hole tunnel launch of a major domestic gas supply project
with a diameter of 62 inches (1,575 mm) for the – namely, the construction of the Ajaokuta-Ka-
pipe at a depth of 40 metres below the riverbed. duna-Kano (AKK) gas pipeline.
So far, he said, horizontal drilling has been very When finished, this link will follow a 614-km
difficult because the planned route of the line route, running northward from the left bank of
is made up of many different soil formations, the Niger River in Kogi State to the capital city of
including layers of sand, clay and gravel. Kano State. It is meant to serve as the first section
These difficulties have arisen, he explained, of the Trans-Nigeria Gas Pipeline (TNGP) but
because there are no companies in Nigeria that will also deliver gas to domestic TPPs, thereby
have the right type of horizontal directional making electricity more widely available.
drilling (HDD) equipment to perform this The pipeline will have a design capacity of
task. As a result, he noted, Nestoil is looking 3.5bn cubic feet per day (99.11mn cubic metres
for a foreign company that can provide a direct per day, or about 36.175bn cubic metres per
pipe facility. It has held discussions with HDD year), and initial throughput will amount to
Thailand and hopes to strike a deal with the Thai 2 bcf per day (56.64 mcm per day, or around “
company soon, he said. 20.67 bcm per year). As such, it will significantly Nigeria’s
Bringing the equipment into Nigeria may increase the volume of gas available on Nigeria’s
take some time because of the travel restrictions domestic market. government
arising from the coronavirus (COVID-19) pan-
demic, he added. Pricing issues has been urged
Timipre Sylva, Minister of State for Petroleum
Downstream consequences Resources, took note of that last week, saying to support the
The postponement of the pipeline’s completion during the opening meeting of a new gas pric- AKK project by
date represents a setback for the government’s ing committee that the government had to work
gas-to-power programme. The OB3 link was to support the AKK project. Specifically, he said, developing a new
designed to pump stranded gas from east to Abuja must develop a new domestic gas tariff
west across the Niger River Delta region, thereby regime that is agreeable to gas producers, as domestic gas
ensuring regular deliveries of feedstock to TPPs well as industrial gas consumers and residential
in the western part of the region. consumers. tariff regime
The delays will also affect Seplat Petroleum, “Without appropriate pricing, we can’t get it
a local upstream operator that has been hoping right,” Sylva was quoted as saying by The Sun.
to use the pipe to deliver gas to the 459-MW “We have to ensure that gas becomes affordable.
Azura Edo TPP. Seplat made a final investment It is sad to note that we sell gas cheaply to inves-
decision (FID) on the Anoh project and struck tors while the price is high in the domestic mar-
a take-or-pay supply deal with the Azura-Edo ket to the extent that some Nigerians say diesel
station last year on the basis of expectations that is cheaper than gas.”
the pipeline would be ready. The minister also told the gas pricing com-
These problems are reflective of a general mittee that it would have 30 days to draw up
slowdown in the gas-to-power programme. and submit a report on gas pricing. The docu-
Officials in Abuja had said several years ago that ment should include a review of domestic gas
they wanted to add at least 10,000 MW of new prices and benchmarks and recommendations
gas-fired generating capacity between 2015 and for pricing methods that can accommodate all
2020. In turn, this initiative was supposed to types of customers, along with evaluations and
support a wider effort to bring the country’s total technical suggestions.
generating capacity up to 40,000 MW, more than Yusuf Usman, the committee’s chairman,
double the current level, during the same period. responded by pledging to uphold all of Abuja’s
So far, though, work has not proceeded at requirements. It remains to be seen, though,
the anticipated speed. Nigeria will not meet its whether this deadline can be met. ™

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