The Department of Petroleum Resources, DPR, has once again blamed the little or no development in the domestic gas supply to inadequate gas pipeline infrastructure in the country.
The Director, DPR, Mordecai Laden, raised the concern at the 2017 DSO Stakeholders’ forum, held in Lagos.
According to him, the Federal Government had introduced the National Domestic Gas supply and Pricing Regulation to provide regulatory framework that underpins the strategy to leverage the full potential of gas to achieve significant impact on the economy and its GDP.
“The DPR in its responsibility will then allocates DSO to the E&P companies yearly based on the National Gas Requirement. The policy is focused on jump-starting and sustaining gas supply to the domestic market to enable usage in gas to power, gas-based industries and commercial subsector.
“However, inadequate gas pipeline infrastructure is our major challenge in the domestic gas supply and market growth.”
He recalled that the available gas infrastructure in the country was largely limited to the Escravos Lagos Pipeline System, ELPS, adding that most of the other gas pipelines were project specific, point-to-point and lacks flexibility.
Laden noted that the government at the moment, had begun the implementation of a nationwide gas infrastructure blueprint with the aim of connecting all key supply sources to markets across the nation.
He added that work is currently ongoing on a number of gas pipeline infrastructures at various locations in the country, saying “these interventions will increase the carrying capacity in-country which I believe will boost investor confidence in the sector.”
Meanwhile, other challenges inherent in the domestic gas market valued chain identified by Laden, included; “Huge legacy debts owed suppliers by off-takers, pipeline and infrastructure vandalisation, insecurity in the oil and gas operating areas, inadequate gas project funding, slow contracting and approval process, late customers’ on-stream date, unfavourable commercial framework.
“Also, others are; IOCs preference of export because external markets are established and secured while in the domestic market there are limited credible off-takers; Financial problems hamper a lot of third party off takers; lack of synergy makes it difficult for swap agreements; PSC do not have gas terms, AG is produced by operator and there is a need to recover cost; exploration drilling has not occurred for the past 10 years, limiting gas reserves that can be diverted to the domestic market; uncertainties related to the non-passage of the PIB and underdeveloped domestic market.”
Continuing, he called for a realistic setting of 2018 NGR, which will guarantee expected gas availability to the domestic market; gas trading; and act as the key to the growth and development of the Nigerian gas industry in line with the federal government aspirations.