The quest by the federal government to supply uninterrupted gas to the Nigeria-Morocco gas pipeline, a $25 billion project aimed at transporting Nigerian gas to Europe through Morocco, is being threatened by lingering gas supply challenges in the country, BusinessDay’s findings have revealed.
The proposed pipeline, initiated in December 2016 after an agreement between the Nigerian National Petroleum Company (NNPC) Ltd. and the Moroccan government, is expected to connect Nigerian gas to every coastal country in West Africa (Benin, Togo, Ghana, Cote d’Ivoire, Liberia, Sierra Leone, Guinea, Guinea-Bissau, Gambia, Senegal, and Mauritania), ending at Tangiers, Morocco, and Cádiz, Spain.The federal government, through the ministry of state for petroleum (gas), assured stakeholders on Tuesday of uninterrupted gas supplies to the Nigeria-Morocco Gas Pipeline Project.
BusinessDay findings showed concerns have grown about Nigeria’s ability to meet the gas supply requirements of the pipeline.“We have not been able in 30 years to extend the 100 million standard cubic feet per day West African Gas Pipeline beyond Ghana, and supply can be epileptic,” a senior industry operator in the gas sector told BusinessDay.
He added: “Nigeria is yet to complete the 48-inch, 127-kilometer, Obiafu-Obrikom-Oben Gas pipeline that would enable gas to move from the eastern delta to western Nigeria and feed their demand.“The Ajaokuta-Kaduna-Kano natural gas pipeline project is already over budget and over time, commercial operation of Escravos-Lagos Pipeline System-2 to double domestic pipeline capacity between East and West to 2bcf/d has gone into voicemail as NNPC’s stock of excuses has long been exhausted.”
“Yet we are talking about participating in and being the primary supplier for a 5300-km pipeline from here to Morocco. This is the kind of thing that makes Nigeria a laughing stock,” the operator said.For Chinenye Ajayi, team lead of the power and infrastructure practice at Olaniwun Ajayi LP, the lack of gas infrastructure to harness the gas potential within the country remains a big challenge.
“In 2021, the federal government declared a decade of gas, yet not much progress has been made in this regard,” Ajayi said.Nigeria’s ‘Decade of Gas’ is a government-led initiative aimed at harnessing the country’s vast gas reserves to drive economic growth and development. It was launched on March 29, 2021, by then-President Muhammadu Buhari in Abuja. Under the plan, Nigeria will, in collaboration with other stakeholders, ramp up gas use in the decade from 2020 to 2030.
The ‘Decade of Gas’ initiative is built on the premise that gas is a key driver of economic growth and development. Nigeria has nearly 209 trillion cubic feet of natural gas reserve, which ranks as the ninth largest in the world, but harnesses only about 8 billion standard cubic feet per day of gas, and most of it is sent to the export market.“There have been several efforts essentially. Thankfully, the Petroleum Industry Act came in at some point but there is still a lot that has not yielded results,” Ajayi said.
Ese Osawmonyi, a senior analyst at SBM Intelligence, said Nigeria is facing obstacles in supplying gas to both domestic and international vendors due to financing issues, flooding, growing domestic consumption, and security concerns.She noted that due to Nigeria’s infrastructure and security concerns, the country has failed to establish itself as a major exporter of liquefied natural gas to Europe.“Conflicting viewpoints between the government and experts underline the importance of conducting a full study of Nigeria’s gas supply capacity as well as potential impediments to the Nigeria-Morocco pipeline project’s ongoing feedstock supply,” Osawmonyi said.
She added that failure to meet gas supply obligations can result in legal and financial consequences, harm the country’s reputation as a dependable supplier, and strain international ties.“Disruptions in gas deliveries might potentially reduce government earnings and deepen Nigeria’s FX liquidity crunch,” Osawmonyi said.In 2022, NNPC Ltd. signed agreements on the gas pipeline project with the National Office of Hydrocarbons and Mines of Morocco and the ECOWAS Commission.
The federal government said the gas pipeline, designed to be 7,000km long, will contribute to accelerating access to energy for all, improving the living conditions of the populations, integrating the economies of the sub-region, and mitigating desertification.For this to happen, experts said infrastructure projects, including pipelines, must be delivered on time, the country would have to transition to market-based gas pricing, settle historical debt to power plants, and incentivize fiscal and commercial terms for offshore non-associated gas developments.
Source:https://businessday.ng