Uchenna Izundu
International Editor
LONDON, Feb. 11 -- Producers of natural gas in Nigeria will be expected to sell gas at an affordable price to the domestic market under a new pricing policy approved by Nigerian President Umaru Musa Yar'adua.
Gas producers also will allocate a share of their production and resources to the domestic market rather than export it. No details were given on what this quantity would be.
The plan underpins Yar'adua's commitment to ensure that Nigeria develops its gas reserves for domestic use focusing in particular on electric power generation. Industries such as fertilizer and methanol that require gas as feedstock will be able to compete with their counterparts in other low-cost gas producing countries, according to presidential spokesman Olusegun Adeniyi.
Adeniyi said the amount of gas reserved for domestic consumption will be periodically determined by the Minister of State (Gas) in the Federal Ministry of Energy. Also, a new gas department will be established in the federal energy ministry to implement the gas policy and regulations.
Nigeria's proved gas reserves are estimated at 184 tcf, but it has struggled to attract investment in the electric power sector because of low prices and a lack of regulations, leaving investors to prefer exporting gas as LNG. Nigeria's gas flaring has amounted to 3.5 billion boe over the past 26 years because it does not have the infrastructure to distribute gas locally (OGJ Online, Jan. 29, 2008).
Experts said that the challenge for any projects in Nigeria would be to strike the right balance between selling gas domestically and selling more profitably in the international LNG market.
Contact Uchenna Izundu at [email protected].
