Nigeria yet to find market for monthly 85bcf of produced gas

[By Sopuruchi Onwuka]

With numerous gas delivery infrastructure and liquefaction plant expansion under project stages, Nigeria still struggles with management of a monthly average of 85 billion standard cubic feet (BCF) of produced gas which cannot find any market.

According to the monthly industry operations report published monthly by the Group Public Affairs Division of the Nigerian National Petroleum Corporation (NNPC), commercialization and utilization of produced natural gas in the country has traditionally remained a sour point in the management of the nation’s petroleum resources.

Group General Manager in charge of the division, Dr Kennie Obateru, declared in a media statement that whereas only 137.41 billion standard cubic feet (BCF) of the 222.34 BCF of natural gas produced in November 2020 was commercialized, gas flare rate in the month was only 7.89% or 577.39 million standard cubic feet per day (mmscfd).

Average daily natural gas production was 7.412 BCF, he stated, explaining that companies operating Joint Ventures with NNPC accounted for 67.29 percent of the volume; while firms that operate Production Sharing Contracts (PSCs) with NNPC accounted for 19.97 percent of the gas volumes produced in the month.

Significant 12.74 percent, Dr Obateru stated, was produced directly by the Nigerian Petroleum Development Company (NPDC) the exploration and production business arm of NNPC.

In the report quoted by Dr Obateru, the domestic petroleum industry produced a total of 3,004.06 BCF of natural gas in the full year between November 2019 and November 2020, representing an average daily production of 7,642.69 mmscfd.

In giving account of value derivation from the produced volumes of gas, Dr Obateru explained that out of the 137.41 BCF of gas commercialized in November 2020, the domestic market absorbed 39.99 BCF or 1.333 BCF per day. The nation’s electric power sector took 789 mmscfd of the volumes delivered to the domestic market as the basis for generation of about 3,358 megawatts (MW) of electricity in the month. The November gas supply indicated significant improvement from preceding October when an average of 750 mmscfd was supplied to the domestic market.

The export market consisting regional and international markets took 97.42 BCF or 3.248 BCF per day.

Despite improvements in gas delivery to the domestic market, The Oracle Today reports that significant 85 BCF of gas, or nearly 38 percent of total gas produced by the country, could not be channeled out of production sites.

Dr Obateru stated that the volumes that could not find market, precisely “37.45% was re-injected, used as upstream fuel gas or flared.” That is more than double of total volumes consumed by the country in the period under review.

The Oracle Today reports that reinjection reported operators to regulators is explained away as the only reasonable and logical alternative to flaring. Thus, reinjection is actually a plausible operating strategy to keep producing oil without violating gas flare limits at production sites.

Both the producing companies and host country have their reputation at stake in curbing oilfield greenhouse gas emission; and Nigeria is particularly emerging from its dark shadows of international recrimination for oilfield operations rascality.

From a notorious history of massive gas flares and associated environmentally degrading emissions that sparked community hostilities against Shell in the Niger Delta, the Nigerian petroleum industry has remained under global focus for environmental action. And the government has been relentless with policy evolution to cut emissions and associated resource waste.

The policies which were evolved across years created commercial incentives that enabled Nigeria to begin development of domestic and regional natural gas markets while also capturing space in the global gas supply play. Later policy modifications conceptualized development of more gas delivery infrastructure for the domestic market and additional processing plant capacity for both domestic and export supplies.

With a wide harnessing gap which evolved through decades of linear operations that targeted only oil, gas evacuation to avert continued flaring at oil production sites has remained a huge strategy quandary for the NNPC and its partners in the industry.

According to the Managing Director of the Nigeria Liquefied Natural Gas (NLNG) Limited, Mr Tony Attah, the company is primarily floated not just for resource monetization, but also to cut the volume of flare gas in the country from over 60 percent to less than 20 percent.

He told The Oracle Today in an interview that with plans for additional plant capacity, the NLNG in which NNPC holds overriding ownership stake would harness larger volumes through government’s ongoing flare gas commercialization programme to earn more money for the country and also drastically cut or totally eliminate flares at the nation’s producing oilfields.

The Group Managing Director of NNPC, Mallam Mele Kyari, stated at a meeting with media executives in Lagos that the corporation was driving realization if critical gas transmission projects that would deepen the domestic gas market for national economic development and also establish the basis for future development of export infrastructure to supply Nigeria’s gas to North Africa and Europe. 

Leave a Reply

Your email address will not be published. Required fields are marked *