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Local demand for natural gas to reach 1,140mcm by December , Minister

The Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, on Thursday said local demand for natural gas was expected to reach 1,140 million cu metres per day by December.

Alison-Madueke said this in Lagos in a key-note address entitled: “Gas to Power –– Prospects and Challenges” delivered at the conference of the National Association of Energy Correspondents in Lagos. According to her, the increase in demand for gas was due to the growth in thermal plants in the country.

The minister said that from a modest gas demand of about 650mcm per day in 2005, it would increase to 3,000 mcm per day by 2015. Alison-Madueke said that this amounted to a growth rate of 16.5 per cent annually compared with the global average of about 3 per cent.

The minister said that for Nigeria to attain her dream of being one of the world”s top 20 economies by 2020 there must be an increase in electricity supply. She said that Federal Government has invested massively in the power sector toward achieving this feat.

“From less than 3,5GW generating capacity in 2005, the Nigerian power sector is undergoing an unprecedented growth to possibly as high as 15GW by 2015 based on projection,” she said.

Alison-Madueke said that a significant part of this power generation would come from the gas fired thermal power points.

The minister said that poor commercial framework for gas was a major challenge hampering investment in gas supply.  She said that inadequate gas supply infrastructure in terms of capacity of pipelines and connectivity between regions of supply and demand was affecting the growth of gas sector. The minister said that a revision of the gas price to power from the non-commercial level to a more sustainable commercial level was carried out to address these challenges.

Allison-Madueke said that her ministry had signed commercial agreements with the Pan Ocean/ NNPC JV and Egbin Power Plant which, according to her, will guarantee supplier and investor confidence in gas development.  She said that the government had implemented the World Bank Partial Risk Guarantee to take care of the concern expressed by suppliers over payment for gas supplied.

“The combination of the above commercial steps creates an environment that assures investor confidence in gas development.  This confidence was lacking previously and was at the core of the reluctance to grow supply. The minister said the government had commenced interventions in implementing the gas masterplan infrastructure blueprint, saying that contract for critical pipelines like Ob/Ob-Oben would be awarded soon.  As part of efforts to leverage gas for economic growth, the minister said the government had effected a change of pricing arrangement.

She said that pricing to the manufacturing sector would be broken into two for transparency and elimination of inefficiency that resulted in higher end price.


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