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A Practical Cross-Border Insight into Gas Regulation Work 

by Global Legal Group,

Published: May, 2011

Submission: May, 2011

 



1. Overview of Natural Gas Sector A brief outline of Nigeria’s natural gas sector, including a general description of: natural gas reserves; natural gas production including the extent to which production is associated or non-associated natural gas; import and export of natural gas, including liquefied natural gas (LNG) liquefaction and export facilities, and/or receiving and re-gasification facilities (“LNG facilities”); natural gas pipeline transportation and distribution/transmission network; natural gas storage; and commodity sales and Nigeria has abundant gas resources. As the world’s seventh largest, and Africa’s largest, deposit of natural gas, with a current reserve ofover 185TCF, Nigeria is described as a gas province with some oil in it. Nigeria’s natural gas reserves are largely unexploited.However, large quantities of associated gas are flared in the process of oil production. The Federal Government of Nigeria is currently implementing policies to reduce gas flaring by stimulating domestic gas utilisation. The major export gas in Nigeria is LNG. The Nigerian Liquefied Natural Gas Company Limited (NLNG) (Nigeria’s only operating LNG company), has six trains and is building the seventh. Other major LNG projects in different stages of development include the US$ 3.5 billion Brass LNG and the US$ 7 billion OKLNG project. Recently, a number of floating LNG projects have been proposed. Apart from the export of LNG, pipeline gas is being exported through the West African Gas Pipeline (WAGP) to countries in West Africa such as Togo, Benin Republic and Ghana.


The Nigerian Gas Company (NGC), a subsidiary of the Nigerian


National Petroleum Corporation (NNPC), is responsible for gas


transmission in Nigeria through an unintegrated gas pipeline


network. Current pipeline infrastructure comprises basically of two


unintegrated pipeline networks totalling approximately 1,100


kilometres: the Alakiri-Obigbo–kot Abasi Pipeline, (the Eastern


Network), and the Escravos–agos Pipeline System (ELPS), (the


Western Network), and dedicated pipeline infrastructure owned by


the NLNG and the NNPC/SPDC/Total joint venture. There are also


local distribution companies such as Gaslink Limited and Shell


Nigeria Gas, which distribute natural gas to major industrial areas


in the western and eastern parts of Nigeria.


The government has recently developed and is promoting the


Nigerian Gas Master Plan (NGMP), which is expected to underpin


the development of gas infrastructure, including central processing


facilities and transmission pipelines in Nigeria.


1.2 To what extent are Nigeria’s energy requirements met


using natural gas (including LNG)?



 


A mix of energy sources is used to meet Nigerian energy needs.


They include firewood (used predominantly as cooking fuel in the


rural areas), hydro-energy, refined petroleum products and natural


gas. Nigeria’s energy requirements are met through oil (64%),


natural gas (27%) and hydro-electricity (8%). It is estimated that


about 80% of natural gas utilised in Nigeria is used for power


generation. The remaining 20% is utilised as industrial fuel in the


cement, fertiliser, rubber, manufacturing, aluminium and steel


industries. LNG is not used in Nigeria.




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