As Angola is set to have a prolonged reign as Africa�s prime oil producer given the intractable nature of Nigeria�s Niger Delta crisis, the Federal Government should be wary of a replication of the change in status in the gas sector, a draft policy paper has warned.
Indeed government hopes to take advantage of heightening demand for the product internally and abroad to etch itself on the leaders table, significantly tweaking its status from one “that flares to one that aggressively utilises the commodity.”
Government�s projection is that demand of the resource, now at about five billion cubic feet per day, would spike to 20 billion cubic feet by 2011, a fourfold rise.
This surge in demand is forecast to come from Europe and the US where the price for the for gas is at kite high levels and also from the domestic scene where power sector growth, it is believed, would lead to an unprecedented guzzling of the commodity by soon to be on stream power plants.
Besides the in-coming generation of power plants, there is the fertiliser and three methanol plants already on stream and the West (and North) African pipeline project. Others are the two new cement plants and aluminum plants.
And to meet the expected demand, there are plans to significantly rev up proven gas reserves by 2011, the terminal year of government�s medium term plan beginning this year. “Planned exploration and development of the vast gas resources will be embarked upon to meet the current global demand for gas,” the draft policy notes.
Although the plan was silent on target production, it says that gas resources will be harnessed and optimally integrated into the national economy, its energy mix and industrial processes.
“A balanced development of local gas utilisation programmes and export based projects will be pursued,” the draft document further says and hints that the target date of 2008 for ending gas flaring would be adhered to along with strict environmental compliance requirements.
To ensure hitch free supply of gas to the domestic market, there will be adequate geographical coverage of the gas transmission and distribution network, and while adequate infrastructure will be instituted to encourage Foreign Direct Investment inflows and entrench a competitive macroeconomic environment for all stakeholders.
But achieving this would require the mobilisation of local content and ensuring linkage with other sectors of the economy, the proposal notes. And for the catalytic nature of the private sector, it is proposed that it would be at the heart of driving the process as government declares a determination to complete the ongoing liberalisation and privatisation programme of the downstream sub-sector of the petroleum industry.
The downstream sector comprises companies involved in the exploration and production of the resource.
But government�s chief worry in all of this is the Niger Delta question. There are worries that the result of years of neglect of the region by government would come back to haunt the realisation of the gas plan. “It is evident that Nigeria will not realise the economic benefits the oil and gas industry portends if it does not quickly find solutions to the Niger Delta issue.�
In the Niger Delta, the report, observes, are intractable problems of “absence of law and order, inadequate infrastructure, low literacy levels and extremely high unemployment levels as well as limited income generating opportunities.”