Minister of State for Petroleum Resources Ibe Kachikwu recently lamented over an impending energy crisis for the country, and cautioned that the only respite lies in a new focus on the country’s gas reserves.
While addressing the 11th edition of the International Conference and Exhibition by the of the Nigerian Gas Association (NGA) in Abuja, Kachikwu explained that the country’s continued dependence on oil alone to run her economy, was hurting and she would need to pay more attention to the gas alternative, especially in the light of the country’s abundant endowment in gas reserves. To buttress his argument Kachikwu outlined some factors that dictated the urgency of the country’s adjustment to include the following.
Firstly, the country no more enjoyed priority attention from oil and gas markets as there is new competition for investors from Southern and Eastern African countries, challenging her dominance. Secondly there is a much more constrained international environment with the mounting number of new LNG suppliers coming on stream globally, and with stiff competition for Nigeria. More importantly, the prices of oil are forecast to fall after 2030, and stay low for a long period with a possibility of absolute fall in demand for oil and a related impact on the price of gas.
Beyond these foregoing factors, Kachikwu also mentioned some challenges with the domestic environment which needed to be cleared and include the security of supply risks, sector governance and business environment issues. According to him “We could add more to these headwinds based on the recent reports of the Nigerian Bureau of Statistics (NBS), the World Bank and the IMF who have made it their business to track our microeconomics”.
Clarifying further the Minister stated that “Nigeria has a challenging future and must broaden its economy beyond oil, hence the thrust of the gas policy is that we need to re-focus our economy using the competitive advantage of our gas towards achieving gas based industrialization”.
Against the backdrop of the foregoing Kachikwu announced that the government had commenced the review of the 2008 National Domestic Gas Supply and Pricing Policy, as well as the overall issue of gas pricing in order to present a clearer signal to investors. Government would therefore expect operators in the country’s gas sector not to stand in its way but serve as partners in progress to ensure the stability of the country’s power sector, in a manner that would be critical to the overall success of the government’s gas policy.
Kachikwu’s clarification is coming at a time when public confidence in the management of the country’s oil sector by the government is at low ebb. Even if he did not mention such specifically the challenges facing domestic oil sector include the perennial low level of local refining of petroleum, the voodoo-like concealment of government involvement in payment of subsidies, the unending run of massive instances of fraud in the sector especially with respect to the Nigerian National Petroleum Corporation (NNPC), all of which distort the perception of gas as the vey key to the country’s energy solution. This is especially so as the country is more of a gas endowed nation than oil rich.
This is why the lament by the Minister needs to be taken with a pinch of salt. What Nigerians expect from him and that sector are solutions not words of panic. For instance even as he may be lamenting, the very solution of repositioning of the industry through an improved regulatory environment remains in abeyance, following the delay in facilitating the final rites of the Petroleum Industry Governance Bill. This is just as several other legislations and instruments of supervising the sector are at various stages neglected by the government.
While Kachikwu’s observation is noted the country expects nothing other than him driving the gas agenda with full steam.
