Nigeria's foremost Online Energy News Platform

Nigeria should Scrap JV Arrangement —Prof. Ibe

-By Yange Ikyaa

Aretired diplomat of the United Nations, Prof. Chidi Ibe, has said that Nigeria should end the Joint Venture (JV) it goes into with International Oil Companies (IOCs), as the business arrangement, is too expensive for Nigeria to cope with and offers inadequate benefits of profits.

He also advised that the country should rather embrace the Production Sharing Contract (PSC) model which, he thinks, will free Nigeria from contractual monetary contributions that are necessary under JVs in the form of “cash calls” that leave Nigeria perpetually in debt.

Prof. Ibe stated this while delivering his paper during the 2019 Annual Oloibiri Lecture Series and Energy Forum (OLEF) organized by the Society of Petroleum Engineers (SPE), Nigeria Council, on April 25, 2019 with the theme “Energy Security and Sustainable Development in Nigeria: The Way Forward.”

He said Nigeria must “jump down from the JV cow and mount the horse of PSA,” while also insisting that Nigeria must drill new wells in all of its crude oil basins in all the regions of the country. “Let the country be awash with oil wells,” he said.

Also speaking, Justice Derefaka, who is the Programme Manager of Nigerian Gas Flare Commercialization Programme (NGFCP), said 145 to 150BCM of gas is flared globally, which could otherwise be used to generate about 750 million kWh of electricity, an amount of energy that is enough to carter for electrical power needs of the entire continent of Africa.

UN data indicates there are 1.1 billion people without access to electricity, while 588 million people are in the dark and still struggling to gain access to electricity in Africa, with 178 million out of that figure living in sub-Saharan Africa.

“In 2017, Nigeria flared 324BCF of gas, which is enough to produce 3000 megawatts of electricity daily, yet 80 percent of gas at flare points in Nigeria could be viably commercialized,” according to Derefaka.

Yet, 600,000 people die annually in Africa as a result of atmospheric air pollution and Nigeria alone contributes 40 percent of the total gas that is flared throughout on the continent, but the use of gas as a major alternative source of energy could drastically reduce such pollution induced killings.

This NGFCP is expected to curb the emission of 13 million tonnes of carbon dioxide each year in Nigeria.

The Nigerian Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, inaugurated the Proposal Evaluation Committee on April 11, 2017 to screen bids from 825 interested entities in participating in the NGFCP.

It is actively supported either in technical or financial terms by the World Bank, the United Agency for International Development (USAID), and the Facility for Oil Sector Transformation (FOSTER), a non-governmental development agency, funded by the UK Department of International Development (DFID).

Contrary to the thinking that Liquefied Petroleum Gas (LPG), also known as cooking gas, is only for a certain class of people, the Nigerian National Petroleum Corporation (NNPC) has stated that the LPG market in Nigeria has room for everyone to operate.

The Group Managing Director of the NNPC, Dr. Maikanti Baru, made this assertion at the Argus West Africa LPG Conference which held April 25, 2019 in Abuja.

Speaking at the conference, the GMD, who was represented by his Technical Assistant, Downstream, Mr. Abdulkabir Ahmed, contended that the challenges faced in the nation’s LPG sector provide opportunities for people from all strata of the Nigerian society to make a fortune.

According to the GMD, the infrastructural bottlenecks and lack of institutional and commercial regulatory framework which bedeviled the gas sector could be exploited and converted into wealth-creating opportunities.

“We see the need to put in place relevant policies and regulations to stimulate the industry and encourage LPG utilization, while the infrastructure deficits provide opportunities for investments to play critical roles in the industry. From large scale to medium and small scale enterprises, there is a place for everyone in the Nigerian LPG business landscape”, he stated.

Dr. Baru expressed concern that stakeholders were still not forthcoming with solutions to unlock the economic potentials the LPG sector.

“As we speak today, Nigerian energy mix is dominated by biomass-based fuels which account for about 82 per cent while Natural Gas accounts for just 8.8%. This implies a very high potential for explosive growth in the LPG business which will enable more players to come onboard”, he said.

He said the Corporation was currently implementing some key initiatives aimed at consolidating and expanding its footprint across the LPG business value chain, adding that nation’s LPG production would increase to about 5million tons per annum from the current 3million tons upon the completion of the ongoing projects.

He called on other stakeholders to invest in the sector as the corporation was committed to the accelerated development of the domestic gas market to significantly drive the multiplier effect of gas.

Also speaking, the Managing Director and Chief Executive Officer Designate of the NLNG Shipping Management Limited (NSML), Mr. Ahmed Abdulkadir, affirmed that in spite of the numerous challenges facing the LPG sector, NLNG had recorded significant progress in the last 10 years and was committed to the LPG market.

The Executive Secretary, Petroleum Products Pricing Regulatory Agency (PPPRA), who was represented by Mr. Agbaje Olusupo, General Manager, Gas & Renewable Energy, said the agency would keep to its regulatory mandates to ensure fair play in the LPG market, adding that the product had been deregulated.

Earlier in his opening remarks, the Senior Vice President, Argus UK, Mr. Phil Shaw, commended the NNPC for its sound initiatives and critical roles in building a gas-driven economy.

He also appreciated the active support of the corporation towards organizing the first Argus LPG Conference in West Africa.