President Umaru Yar� Adua said on Monday that Nigeria required to increase funding for oil and gas sector from the current $4.5bn to about $10bn annually in order to achieve optimum development in the sector.
Speaking at the first Nigerian Gas Stakeholder�s Forum in Abuja, Yar� Adua said that the anticipated growth in gas supply to meet domestic demands would require a significant injection of funds into the sector.
He explained that such demands constituted a strain on government�s resources.
The President explained that the Federal Government was already looking at an alternative model that would allow third party investor funds to flow and drive capacity growth required in the sector.
�As part of our strategy to reform the sector, we are commercialising the NNPC to enable the company go to the capital market to raise critically required funds for sector activity,� he said.
Yar�Adua stressed that since Nigeria has the seventh largest gas reserves in the world with a proven reserve base of 180 trillion cubic feet and a significant scope for additional reserves, it was essential to develop appropriate mechanisms that would allow the resource base to be actively and efficiently exploited.
He remarked that gas flaring had reduced from almost 100 per cent a few years ago to about 36 per cent currently.
He attributed the development to the growth in Liquefied Natural Gas export and the demands of the various power projects across the country.
The President noted that Nigeria exported about 18million tonnes of gas per annum from Bonny NLNG.
He regretted that the massive supply growth had not been replicated in the domestic market.
He said, �While the power and non-power sector demand has grown steadily, growth in domestic supply is lagging behind, thus creating a significant shortfall, with its attendant impact on the domestic economy including low power generation, low industrial production and low employment opportunities.
�The situation calls for a holistic approach, which not only addresses the short-term problem, but also creates an enabling framework for the medium and long term gas sector challenges; one which better aligns the gas and power sectors as well as gas and industrial sectors.�
He added that the government was committed to the speedy implementation of the Gas Master Plan, which according to him, was critical to the development of the holistic framework.
Yar� Adua explained that delivering on the national aspiration required the cooperation of joint-venture partners and other major and marginal oil and gas operators.
He credited them for the level of progress the nation had made so far in the oil sector.
He said government�s strategy with regards to gas emphasised effectively meeting domestic demand while also vigorously maximising the huge export potential of the product.
�In line with our commitment to properly structuring the gas sector, we are coming up with a domestic gas supply obligation and pricing regulation framework,� he said.
Nov272007