Investors willing to stake $40 bn in gas development _OPTS

Sopuruchi Onwuka

Some key players in the upstream petroleum industry have accepted to collectively shoulder some $40 billion investments in new development if the government would dismantle operational challenges that impact returns on investments.

The pledge came in response to call by the Group Chief Executive Officer of Nigerian National Petroleum Company (NNPC) Limited, Mallam Mele Kyari, at the ongoing Practical Nigerian Content Forum hosted by the Nigerian Content Development and Monitoring Board (NCDMB) at Uyo, Akwa Ibom State.

Mallam Kyari had declared acute gas undersupply to the domestic and international markets, calling for more investments from the country’s industry partners to enable the national oil company deliver gas to the people.

He said low investment has remained a big issue in delivering the targets of government’s numerous programmes in the gas sector of the petroleum industry, adding that the industry could not meet demand due to capacity limits in the system.

He lamented that the Nigerian petroleum industry cannot currently meet gas supply to the power sector despite the country’s huge natural gas resources locked in assets operated by the companies.

In speaking for big players in the industry, Country Chair of Shell Companies in Nigeria, Mr Osagie Okunbor, declared that investors are willing to stake funds in a list of already mapped programmes including the NNPC’s critical gas projects and new developments only if the operating environment is enhanced to guarantee security and commerciality of businesss.

Mr Okunbor explained that the players gathered under the aegis of the Oil Producers Trade Section of the Lagos Chamber of Commerce and Industry (LACCI) have taken note of improvements in fiscal provisions in the Petroleum Industry Act (PIA) that govern commerciality of operations.

He said the PIA has improved on fiscal stability required to progress with investments that would help realize government’s economic aspirations in the industry, adding however that more work would be required to dismantle key impediments to safe and profitable operations.

According to Mr Okunbor, both public and private players in the industry are now pointing in the same direction after the PIA paid greater attention to gas by enhancing the fiscal provisions for investments. He listed a set of new investments in gas by the OPTS to include the LNG Train-7 project and the twin ANOH gas development projects by Shell and Seplat respectively.

In linking the economic focus of gas investment to the Nigerian Content agenda, Mr Okunbor pointed out that emphasis must shift from the traditional quest for revenue to perceiving the commodity specifically as economic development catalyst.

In his presentation, the Group Executive Director in charge of upstream operations of the Nigeria National Petroleum Company (NNPC) Limited, Mr Adokiye Tombomieye, whose remarks were delivered by the company’s Chief Investment Officer, Engr Bala Wunti, stated that growing understanding among government and investors in the industry has led to significant steps towards Final Investment Decisions on critical deepwater development projects.

He listed the projects to include Shell operated Bonga North; Shell operated Bonga Southwest/Aparo; and Chevron operated Agbami. He said all the three FIDs are to be concluded at different times before end of 2024.

However, members of the OPTS declared at the forum that security challenges were working against industry’s efforts to deliver the economic benefits of gas to the country.

Chairman of TotalEnergies in Nigeria, Mr Mike Sangster, stated at the event that FIDs are possible in secure, profitable and fiscally stable environment.

He called for fiscal incentives, cost effective environment and enhanced operating conditions as the prime spurs for commercial investments.

Deputy Managing Director of Nigeria Liquefied Natural Gas (NLNG) Limited also noted that security issues in the country form the major setbacks in driving investments that would realize many gas centered policies and programmes already supported by the PIA.

He stressed the need for policy makers to link efforts in the industry directly to outcomes, adding that several gas policies and programmes evolved by government have failed to capture global investment and market opportunities.

In proffering solutions, he noted that security interventions in the industry should leverage intelligence gathering, technology and workable collaboration with host communities. He made it clear that security environment should be the critical component of government’s ease of doing business mantra.

On policy instability, he pointed at sundry economic opportunities lost with the failed Olokola LNG and Brass LNG projects which, according to him, include flare reduction, contribution to the country’s gross domestic product, lost Nigerian Content quotient of the projects and lost revenues as gas positions to lead future energy.

Chairman and Managing Director of Chevron Nigeria/Mid-Africa Business Unit, Mr Richard Kennedy, whose remarks were delivered at the panel discussions, listed impediments to investments in the Nigerian gas development to include lack of cost reflective pricing, piling legacy debts in the gas-to-power programme, sanctity of contracts, and security.

Mallam Kyari told the industry that government was working to restore security in the operating environment while simultaneously developing infrastructure that would connect production to the domestic and export markets.  

Group Executive Director in charge of upstream operations of NNPC Limited, Mr Adokiye Tombomieye, whose remarks were delivered by Engr Bala Wunti, reminded the industry that gas has become the preferred energy for the future and therefore would become the new focus of opportunity in the Nigerian petroleum industry.

He said that every player in the country’s upstream petroleum industry must reposition to participate I the Decade of Gas agenda of the government, urging investors to intentionally perceive gas production as core business.

He pointed out that issues raised by players exist outside production, promising that government would work on concerns about size and credibility of the domestic market in order to assist the industry expand the in-country demand basis for investment.

Engr Wunti called on the investors to focus on adding value to upstream commodity by investing processing to produce consumable products for the local market.

“Focus should shift from crude export to product export,” he said, adding that NNPC would continue to support service companies willing to lead innovation in gas processing.