AELEX
  May 1, 2011 - Nigeria

A Practical Cross-Border Insight into Gas Regulation Work
  by Global Legal Group,

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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