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Oil firms to lose licenses as FG plans separate leases for Gas

by Business News Report

Oil companies in Nigeria are to undergo a new licensing round, as the Federal Government yesterday, stated that it plans to separate gas leases from oil leases.
Speaking in an interview with Bloomberg in Abuja, Mr. David Ige, Group Executive Director, Gas And Power, Nigeria National Petroleum Corporation, NNPC, disclosed that the move is aimed at attracting investors and international gas firms such as OAO Gazprom and Centrica to the Nigerian gas sector.
According to Ige, the separation of gas from oil leases will also help increase Nigeria’s gas output and contribute to the country’s plan for gas utilization and commercialization.
He stated that almost all of the country’s gas reserves of 184 trillion cubic feet of gas were found in the course of searching for crude, adding that the new plan will provide opportunities for companies specifically interested in exploring for gas.
He said, “Gas, over the last few years, has become a very prominent commodity on its own, which requires a life of its own. Nigeria needs companies such as Russian exporter OAO Gazprom and Centrica Plc, the United Kingdom’s biggest energy supplier, to enter the market to drive our gas agenda aggressively.”

Ige further disclosed that NiGaz Energy Company, a joint venture created in 2009 between the NNPC and Gazprom could not get a foothold because all the acreages with significant reserves are held by other companies including Shell, Chevron and Exxon Mobil.
According to him, more than 80 percent of Nigeria’s hydrocarbon reserves are in leases held by Royal Dutch Shell Plc, Chevron Corporation, Exxon Mobil Total SA and Eni SpA, whose priority continues to be oil.
He noted that when current industry reforms are completed and a new industry law is passed, companies that are not oil players can have access to gas, adding that this will bring about more vibrant interest from players like Gazprom.
Ige further stated that as parts of the expansion of Nigeria’s gas pipeline network, the Federal Government has shortlisted nine investors who are interested in funding the $5 billion national gas network.
According to him, the network includes the 40-inch, 683-kilometer link from Calabar to Kano, which commences the Trans-Sahara pipeline to Europe among others.
He stated that funds for the project, which will be built through debt and equity finance, will be sought from development finance institutions, export credit agencies and private finance through World Bank subsidiary, International Finance Corporation, IFC.
He further disclosed that a lead arranger to syndicate the loans will be appointed in the second half of the year.
“The trans-Saharan gas-pipeline project is not dead. Given the global dynamics and our energy security considerations, it has become prudent for us in Nigeria to re-evaluate the project and redefine it,” Ige said.
The Trans-Saharan pipeline was first proposed in 2009 to take gas from Nigeria through Niger, Algeria and through the Mediterranean to Europe. Since then, according to Bloomberg, natural gas prices have slumped 58 per cent, raising questions about its viability.
Nigeria currently produces about nine billion cubic feet per day of gas, half of which is exported as liquefied natural gas. While one billion cubic feet a day is flared in the course of oil production, another 1 billion cubic feet is re-injected into oil wells daily for pressure stability.
Almost two billion cubic feet per day is supplied to industries and power plants, where demand is estimated to more than double to five billion cubic feet per day in two years.

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