September 17, 2020

GACN seeks periodic review of gas agreements to deepen utilisation


By Michael Eboh

Gas Aggregation Company Nigeria Limited, GACN, yesterday, called for a periodic review of the Master Gas Sale and Aggregation Agreements, GSAA, to boost the growth of the Nigerian domestic gas market and deepen the utilization of gas across the country.

Speaking at workshop for the review of gas industry agreement templates in Abuja, Managing Director and Chief Executive Officer of GACN, Mr. Olalekan Ogunleye, disclosed that the Master GSAAs had made significant contributions to the growth of the domestic market, adding that in line with best practice, it is imperative to periodically review the Master GSAAs to ensure they continue to reflect current market realities.

He expressed optimism that the updated Master GSAAs templates would help to promote gas utilization and increase domestic gas consumption, including for the purpose of enhancing power generation, deepening the growth of other gas-based business ventures and accelerating Nigeria’s industrialization.

He added that the GACN, had through the workshop, engaged with stakeholders with the hope that the review of the document would expedite negotiation and execution of transaction documents; incentivising payment and contract performance; and minimisation of risks and potential for contract disputes.

Ogunleye noted that it would also facilitate new investments in the gas sector; promote contract flexibilities consistent with market realities; facilitate gas trading and gas swap transactions; and transactional cost reduction for the gas sector.

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He said: “As most of you are aware, the current GSAA Templates were developed in year 2010 for the various strategic domestic sectors to ensure alignment on key commercial terms across the offtake sectors.

“While these documents have greatly contributed to the growth of the domestic market, best practice obliges a periodic review to ensure that it continues to reflect current market realities as well as best practice.”

Also speaking, Chairman Of GACN and Managing Director, Nigerian Petroleum Development Company Limited, NPDC, Engineer Mansur Sambo, noted that 2020 had proven to be a pivotal year for the gas sector notwithstanding the challenges.

He said: “The Federal Governments’ prioritisation of this sector through its strong support for the Ajaokuta-Kaduna-kano, AKK, Project, OB3 project, NPDC business expansion and the Petroleum Industry Governance Bill, PIGB, are huge enablers for oil and gas based industrialisation and sustainable economic development and growth for Nigeria.

“The Honourable Minister of State, Ministry of Petroleum Resources’ declaration of 2020 as the Year of Gas is backed-up by several game changing initiatives such as the National Gas Expansion Programme, nationwide gas penetration initiative through the Liquefied Natural Gas-Compressed Natural Gas, CNG, nationwide roll-out, ongoing domestic gas price review, among others, all providing further positive impetus.

“NNPC Management under the leadership of the Group Managing Director-Mallam Mele Kolo Kyari also continues to give the much-needed dynamic industry leadership and effective execution coordination to birth and deliver on these laudable initiatives.

“It is in the foregoing context that GACN’s current effort to secure broad industry alignment on improvements to the key Gas commercialization document — the Gas Sale and Aggregation Agreement (GSAA) is most welcomed.

“It is also pleasing that other gas sector value expansion documents such as the Gas Swap Framework and the Interruptible Gas Sale Agreement (IGSA) Master template would be considered.”