From Our Correspondent
The Managing Director of Nigeria LNG Limited (NLNG), Dr Philip Mshelbila has expressed optimism on the workability of the recent Executive Order on Oil and Gas Reforms signed by Present Bola Ahmed Tinubu would unlock gas investment opportunities.
Andy Odeh, NLNG’s General Manager, External Relations and Sustainable Development quoted Mshelbila as making the remarks in a statement emailed to TheNewsZenith on Thursday.
Odeh said the NLNG boss gave the expression during an interview on Arise Television, on Tuesday in Lagos.
According to him, this executive action will be crucial in unlocking the development of non-associated gas (NAG) in Nigeria.
“It will drive domestic gas utilisation and ensure a stable gas supply for NLNG’s growth project, Train Seven.
The NLNG boss highlighted the significant impact of the Executive Order on the gas industry.
He said it would incentivise the much-needed investments, addressing specific challenges hindering ease of business and would attract investment in the oil and gas sector.
“Nigeria holds somewhere about 38 per cent of the reserves in Africa. However, we have only been able to attract about five per cent of investment in oil and gas.
“This means we are punching way below our weight when attracting investment and there’s a reason for this.
“Part of it is that when people want to invest, they look for returns, low risks and ease of business.
“If you focus on the fiscals in the Executive Order, what the government has done is look at areas that have not been addressed by the Petroleum Industry Act (PIA) or other fiscal laws that are in existence.
“One of those areas is what we refer to typically as Dry Gas or Non-Associated Gas (NAG),” Mshelbila said.
He noted that when natural gas occurs in the reservoirs, it occurs together with oil or other liquids like condensate.
“So, when you produce them together, you can sell the oil or the condensate and make enough money to cover your spending on developing the gas.
“Where you have non-associated gas, the gas is occurring alone, and you don’t have the benefit of the revenue from the condensate or the crude oil. You need to invest more to develop that gas because you don’t have that offset.”
One of the things that the presidential directive has done, is to enable those who want to develop NAG to benefit from tax credits over the first 10 years of the project. After that, it becomes a tax allowance.
From here, he said they could recover their investment in NAG through those tax credits.
“We haven’t had this before. There are a lot of NAG fields, both onshore and in the shallow waters that have not been developed. Hopefully, this incentive will unlock the investments within this area,” he stated.
On Train Seven, Mshelbila said the project was progressing well, reaching 60 per cent completion status.
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“We are halfway through the project’s engineering, procurement, and construction. It has been a safe construction, and the progress has been evident.
“At the site, you can see most of the big structures already in place. We are now ensuring that when the midstream project is in place. The gas supply is also there.
“One of the directives in the Executive Order will help us unlock the gas supply into Train Seven,” Mshelbila noted.
On the directive by the government to suspend exports of LPG, he said NLNG domesticated LPG supply in 2022 when the Company’s Board decided to supply 100 per cent of its LPG production to the domestic market. This was two years before the government’s announcement.
“Since 2007, NLNG has demonstrated an unwavering commitment to supplying LPG to the market.
“While all the Butane, primarily used for cooking, has been absorbed by the domestic market, the uptake of Propane, mainly used for transportation, power generation and other industrial uses, has been slower due to infrastructural challenges.”
He noted that NLNG was working with stakeholders in the market to support Propane’s infrastructural development.
TheNewsZenith reports that President Bola Tinubu, last week, signed the Executive Orders on oil and gas reforms. This is in keeping with his efforts to remove obstacles to investments in Nigeria.
A statement issued by presidential spokesman, Ajuri Ngelale said the president has executed Policy Directives to improve the investment climate and position Nigeria as the preferred investment destination for oil and gas sector in Africa.
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