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Why IOCs are Reluctant to Produce Gas in Nigeria

-By Fred Ojiegbe

The international oil companies, IOCs may not be keen to fully harness the gas potential of Nigeria unless there is a guaranteed sustainable payment for the product, Engr. Yusuf Usman, Chief Operating Officer, (COO) Gas & Power, Nigerian National Petroleum Corporation, (NNPC), has said.

Speaking on the imperatives of gas production and energy security at the 3rd Nigeria International Petroleum Summit, NIPS, which held in Abuja, Usman noted that many Nigerians are not ready to pay the commensurate fee for their gas consumption. “If you consume and you don’t pay, you destroy the economy of the country. The IOCs are ready to produce gas, so long they can be guaranteed a sustainable payment. And that speaks to some of the issues. “At a certain time in the country, we were selling gas at 50 cent and we ended up with a mountain of debts. My message to operators and consumers is that we should be responsible in our consumption. If we appropriately pay for what we consume, the demand in the domestic market will significantly increase,” he said. Speaking on the Presidential mandate to produce 10,000 megawatts, MW, he said, “The President promised Nigerians that he would provide 10,000MW additional power to the national grid. Under my mandate, I am to provide additional 5000MW of power. I have to do that. “Like you heard, AKK is a goal and we are going to build that pipeline, Ajaokuta to Kano. Those pipelines must have off-takers. In the process of building that pipeline we are going to put 1,350 MW in Abuja and the partnership with the US has given the dream a reality. We are going to build 900 MW in Kaduna as well as 1,350 MW in Kano. “We can only do that when we have a power purchase agreement, PPA. At the moment the PPA has been suspended because of free eaters in the system who do not want to pay. We are coming out with a solution because we understand the challenges the Nigerian Bulk Electricity Trading Plc. (NBET) is going through. NBET said they would only take gas that can be paid for. That is looking downwards.

“If we do that we would collectively move with the entire sector to deliver on power. We need to industrialize just like other continents because it is our right. We want to advocate that Africa has the right to develop and we would do it responsibly with the use of gas and renewable energy. “We have challenged ourselves that we would move the domestic market from the current level of 1.3BCF to 5BCF. We can only do that if we enable new power and people pay for power.

For Bayelsa, we would make sure that we build a fertilizer plant, gas-based industries. Very soon Bayelsa will become one of the industrial hubs in Nigeria. “You can only improve domestic utilization of gas with infrastructure. That is why one of our mandates is to build infrastructure and we have done it from the commercial perspective.