Nigeria government approves gas sector blueprint PDF Print E-mail

ABUJA, Feb 13 (Reuters) - The Nigerian government on Wednesday approved a blueprint to develop the gas sector by building new infrastructure that would allow gas to be used for power generation and industry rather than being burned off.

The cabinet's approval formalises a "gas masterplan" unveiled last November, although a statement by Minister of State for Gas Emmanuel Odusina did not make clear how the infrastructure plans would be financed.


After the cabinet approved the plan, Odusina said projects must be commercially viable and attract private sector investment. He gave no details about potential investors.

Nigeria exports about 3 billion cubic feet (bcf) of gas per day in the form of liquefied natural gas and burns off about 2.5 bcf for lack of facilities to use it.


It supplies only 0.5 bcf to the domestic power sector even though it could easily absorb 1.5 to 2 bcf, and President Umaru Yar'Adua has said solving the problem of low gas supply was key to ending Nigeria's constant power cuts.


The blueprint follows the approval on Feb. 7 of new rules for the pricing of gas, designed to raise domestic supply by requiring producers to set aside a portion of their output to be sold to power plants or factories below market prices.


Nigeria, an OPEC member and a major oil producer, has the seventh largest proven gas reserves in the world at 180 trillion cubic feet, but a lack of funds and regulation has so far prevented investment in domestic gas-powered industries.


Odusina said the blueprint foresaw the creation of three domestic processing hubs at Warri/Forcados in the western Niger Delta, further east at Obiafu near Port Harcourt, and around Calabar in the far east of the delta.


The Warri/Forcados and Port Harcourt areas have been at the heart of militant unrest in the Niger Delta and numerous oil facilities in those areas have been blown up, curtailing output and preventing oil companies from operating their facilities.


Odusina did not say how the proposed gas hubs would be protected given the insecurity in the region.

He said liquid petroleum gas (LPG) and condensate would be extracted at the hubs while dry gas would be fed into a network of gas transmission lines.


"With this arrangement, more LPG will be available for domestic use and the recurrent problem of liquids ingress into pipelines which has continually impacted on power supply will be permanently eliminated," he said.


The blueprint also calls for the development of three major domestic gas transmission systems: a Western system built around the existing Escravos-Lagos pipeline, a South-North gas transmission line stretching as far as Katsina on the border with Niger Republic, and an East-West inter-connector.


source: Reuters

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