PIA is delivering key investment goals – Sylva

Sopuruchi Onwuka

The newly activated Petroleum Industry Act (PIA) is delivering the key objectives of government in providing congenial domestic industry environment for capital importation and attraction of global investments.

Minister of State for Petroleum Resources, Chief Timipre Sylva, stated that the global industry community has started responding to policy and legal changes in the Nigerian fiscal and operational environment, pointing at flux of investment proposals by existing and new players in the petroleum sector.

He said “the PIA is already improving the petroleum industry’s reputation, paving the way for new investments, creating jobs, supporting the economic diversification agenda and strengthening Nigeria’s ability to fulfill the world’s expanding energy demand.”

The Minister was speaking yesterday in London at the signing ceremony for the Front-End Engineering Design (FEED) for Nigeria’s first Floating Liquefied Natural Gas (FLNG) facility between UTM FLNG Ltd, KBR, JGC and Technip Energies Limited.

He cited the project as one of the idle proposals that have been brought into motion by the provision of the PIA, adding that the project was not just an additional investment into the country but also an energy transition investment that helps drive existing government’s plan for gas based energy diversification.

According to him, the PIA has advanced “generous incentives to enable development, distribution, penetration, and utilization of gas. And this is why the UTM Offshore project will involve the development and financing of 1.52 million tons per annum (MTPA) FLNG facility with a capacity to process 176 million standard cubic feet of natural gas per day and condensate.”

He said the signing of FEED for the project “connects and mirrors the ongoing Federal Government gas revolutionary agenda.”

 In urging the project promoters to also plug it into the government’s gas flare commercialization program, Chief Sylva stated that the UTM FLNG unit should also “target the processing of associated gas currently flared in order to cut carbon emissions and monetize additional reserves for the domestic and global markets which aligns with the Federal Government’s gas flare commercialization program (The NGFCP) and the decade of gas agenda.”

The minister noted the importance of the project in accelerating Nigeria’s speed in the nearly $90 billion global LNG capacity race and in positioning the country to take a role in meeting acceptable energy demand in the world’s low emission environment.

“ We are aware that the number of offshore gas finds has surged in recent years around the world, with liquefied natural gas (LNG) and floating LNG (FLNG) becoming even more important in terms of satisfying the world’s future energy needs. According to market research analysts, the FLNG market is estimated to increase at a compound annual growth rate (CAGR) of 27.14 percent, reaching USD 88.99 billion by 2024,” Chief Sylva stated.

“The UTM offshore FLNG project is therefore timely and will lead towards a faster-moving, more diverse and more flexible global LNG industry,” he declared, adding that the project is also timely at a time gas was “playing a more diverse and inclusive role in addressing energy poverty, and our energy transition journey for developed and in particular for developing economies.”

He pointed out that whereas has enormous gas reserves, the greatest challenge is investing in harnessing and transportations infrastructure as well as in evolving innovation in capturing the full vlue of the commodity.

Meeting the targets, he noted, is crucial to the nation’s environmental performance in the hydrocarbon industry. He said the greatest challenge confronting the nation is how to meet the rising energy demand whilst combating pollution and climate change.

He made it clear that taking low emission path to hydrocarbon resource exploitation has become urgent in capturing the full economic benefits of the nation’s gas resources, which he listed to include provision of affordable, accessible and reliable energy for “sustaining and powering our growing economy, and to lift millions out of poverty.”

“As a government we know our action is essential to enable evolution of the energy system. We believe innovation, technology and policy will be the key drivers of change. No doubt, gas remains the solution to ensuring our energy security, economic competitiveness, and a reduction of greenhouse gas emissions. The benefits of natural gas are well documented. It is flexible. Its supply is diverse. Its range of uses is still expanding. And it makes economic sense.

“However, due to a multitude of factors including a lack of investment, transportation and export infrastructure, and technological challenges, the majority of our gas deposits have yet to be produced” he noted.

The Minister emphasized that gas remains the primary energy source for Nigeria “since it is the foundation of our country’s energy transition and the first move away from oil-based energy sources.”

“Given the large resources that may be developed and used for commercial purposes, we have already proclaimed that gas is our transition fuel and a destination fuel, and we anticipate that it will be a major component of our energy mix by the year 2060.

“Collaborative Partnership is the basis and foundation of the Federal Govt’s Decade of Gas development Initiative,” he declared.

On collaboration, Chief Sylva commended the President and Chairman of the African Export-Import Bank (Afreximbank), Dr. Benedict Okey Oramah, on reaching a financing deal with UTM Offshore Limited to raise $5.0 billion for the project.

He expressed the belief that the finding agreement would lead to additional collaboration in supporting a final investment decision (FID) on the project.

The Minister urged the bank to remain relentless in promoting innovative energy development projects “like floating methanol production plant, floating blue ammonia production plant, and other technologies with a view to creating a zero-carbon emission fuel in Nigeria.”