An Analysis of the Nigerian Gas Sector in Relation to the Policies Legal and Institutional Framework: The Need for Reform

Abstract

Nigeria is a gas economy with specs of oil in it thrives on its constant exploitation of its oil resources with little regard for the full exploitation and utilization of its gas resources. Nigeria holds an estimated 190 trillion Cubic feet (Tcf) of proven natural gas reserves comprising associated gas and non-associated gas, making her the 9th largest gas reserve holder in the world and the largest in Africa. The road for reforms in the Nigerian oil and gas industry began with the inauguration of the oil and gas implementation committee in the year 2000 under the Olusegun regime which brought out a draft petroleum industry bill which later was changed into various versions before being passed on May 25, 2017. As the petroleum industry governance bill with the creation of a new regulatory NPRC (Nigerian Petroleum Regulatory Agency), which will take over the petroleum inspectorate, the department of petroleum resources, the petroleum products pricing Regulatory Agency. Also, two new companies were created under the bill, which includes; Nigerian Petroleum Assets Management Company and the Nigerian Petroleum Company, where the assets and liabilities of the Nigerian National Petroleum Corporation will be shared by these companies and the National Petroleum Company will operate as a fully independent commercial entity. Before this development, the gas industry in Nigeria lacked proper policies, structure, a regulatory and institutional framework to implement policies. This led to the creation of the Nigerian Gas Master Plan which was a blueprint to ensure a wholly competitive, market-driven domestic gas sector by increasing the supply of gas into the domestic market. This plan led to the National Domestic Gas Supply and Pricing policy coming into place, which brought with it the Domestic supply Obligations (DSO) supported by the Domestic Supply Obligation Regulations, given to various oil producers to close supply gaps in the domestic gas market and institutions such as the Nigerian Gas Company, Gas Aggregation Company of Nigeria were created as major agents to ensure the commercialization of gas in Nigeria’s domestic market. The National Domestic Gas Supply and Pricing Policy were backed up by the National Domestic Gas Supply and pricing regulation. All these policies, regulations, and more have helped in the building up of the gas industry in Nigeria. Also structurally with the aid of the gas network codes, Nigeria will be able to have a detailed outline of its present pipeline system structures all over the country and the work-ability of the systems available. Though we as a nation can boost the West African Gas Pipeline, which is a trans-boundary pipeline system for the exportation of gas to West African countries. Also, there is the Escracvos Lagos Pipeline Systems (ELPS) which transport gas to various power plants within Nigeria. The National Petroleum Investment Management Services (NAPIMS) has assisted in the enhancement of the gas industry and the power sector through its joint venture with various international oil companies for the exploitation of gas and through the DSO scheme supplies gas to various IPPs in Nigeria thereby curbing the current power crisis gradually.