12 July 2017
Although Nigeria has been described as a gas province with proven reserves of 188 trillion cubic feet(tcf) of gas and an enviable position as the 9th largest gas reserves holder in the world, minimal efforts have been made by the Federal Government to give priority consideration to the exploitation of gas and the development of critical gas infrastructure. Several decades after the discovery of gas, the legal landscape is still being framed by the dated Petroleum Act which focuses more on oil. The Petroleum Act has very lean provisions on the commercialization of gas as an independent hydrocarbon and lacks a framework for the development of the gas midstream-downstream value chain.
In 2005, an attempt was made to partly resolve the dearth in legislation through the Downstream Gas Bill, but this was unsuccessful. Gas export projects remained the national priority until 2008, when the Federal Government approved the implementation of the Gas Master Plan. The Gas Master Plan was supposed to provoke an entirely different vista of opportunities for Nigeria to launch itself as a mature domestic market.9 years after, the dream of industrialization remains at best, a figment of imagination.
In December 2016, the Federal Government took another bold step which led to the launch of the 7 Big Wins Initiative. This reinforced its commitment to the acceleration of the gas revolution. And on June 28, 2017, the Federal Government approved the new National Gas Policy (the ‘‘Policy’’) which essentially builds on the policy goals of the 7 Big Wins Initiative. The Policy clearly articulates the policy goals, strategies, and implementation plan of the Federal Government of Nigeria to reposition Nigeria as an attractive gas based industrialised nation through the prioritization of local gas demand requirements. Access to infrastructure, a clearly articulated pricing path and institutional capacity strengthening are key aspects of any effective gas policy.
The Policy clearly defines the direction for gas infrastructure ownership by prescribing full legal separation of gas infrastructure ownership and operations and trading. With regards to pricing, the Policy stipulates that the transitional pricing framework will be retained until sufficient gas supply volumes are built up and a mature gas market is established. The Policy exhibits a strong focus on strengthening the capacity of the Ministry of Petroleum Resources to provide leadership to the gas industry in terms of policy making and surveillance capabilities. It also recommends the establishment of a single independent petroleum regulatory agency.