AN INSIGHT INTO THE NATIONAL GAS POLICY
The Federal Government of Nigeria recently endorsed the new National Gas Policy (the ”Policy”) which expands on the approach objectives of the initially launched 7 Big Wins Initiative of the country’s petroleum ministry and the National Economic Recovery and Growth Plan (2017 – 2020).
The Policy highlights the objectives and implementation strategy of the Federal Government for creating an appropriate institutional, legal, regulatory and commercial framework for the gas sector in order to reposition Nigeria as an appealing gas-based industrialized country through the prioritization of local gas demand prerequisites. It aims to eradicate the blockades affecting investment and growth of the sector and move Nigeria from a sole oil-based to an oil and gas-based economy.
The main aspects of the policy include governance; industry structure; development of gas resources; infrastructure; the building of gas markets and developing national human resources.
The National Gas Policy and Governance
A key focus of the policy is the formulation of a legislative framework for gas. This will be developed through the enactment of a core legislation which will inolve gas commercialization and the astute alignment of gas activities into the upstream, midstream and downstream sectors. The new legislation will also introduce a simplified but clearly defined licensing regime which will regulate the licensing of operators throughout the entire value chain of gas exploitation.
The Institutional Framework of the Gas Policy
The Policy suggests the establishment of a National Petroleum Policy Directorate which will fill in as the technical back office for the Minister, alongside the accompanying master focuses: oil policy division; gas policy division; specialist centres: oil policy division; gas policy division. The Policy likewise proposes the establishment of Dedicated Project Desks in the National Petroleum Policy Directorate. The principle function will be to advocate for and push programmes or projects significant to the Policy by being an interface between government agencies and project developers
The Policy also introduces a solitary independent petroleum regulatory office, thus, all regulatory and pseudo-regulatory activities will be removed from corporate entities and taken over by the single regulator. This regulator shall be accountable for the technical and economic regulation of the petroleum sector and shall have licensing, investigative, monitoring and dispute mediation powers. To foster capacity building, the Policy envisages the creation of six new departments under the aegis of the new regulatory authority.
Domestic Gas Supply Obligations
Amid the transitional period, players in the gas sector will be allowed to take part in dealings subject to meeting their DSO commitments. In any case, once the wholesale economic situations set out in the Policy are completely activated, the domestic cost will be set by the market subject to stipulated rules on price production and supervision to forestall abuse.
The Industry Sector
The gas policy postulates an industry established the partnership between the private and public sector, but with a defined partition of obligations between the private sector and the government. The Government has the obligation of developing policy, legislation, regulation, and fostering the growth of competitive and fair gas markets, while the corporate sector will create markets and lead healthy, safe and environmentally-friendly operations while serving the need of their investors and stakeholders
By implementing this, the National Gas Company has been divided into two organizations i.e. the Nigerian Gas Processing and Transportation Company (“NGPTC”) which will own and operate the government-owned gas transmission network; and the Nigerian Gas Management Company (“NGMC”), which will own all the supply contracts and also operate the gas supply business.
The Development of Gas Resources
The Policy seeks to encourage the exploration of gas and the production in different locales of Nigeria, for example, the inland basins and offshore. In addition, it also mirrors the government’s new priority thought for the channelling of flared gas into business sectors for usage by downstream sectors.
Infrastructure and Local Content Development
The Policy specifies that the revised Infrastructure Blueprint shall detect resources and resource clusters, recognize core infrastructure, and rank developments. It also attempts to incentivize and ease access to the midstream to enable private sector investors to improve gas infrastructure. The Policy accentuates the significance of a policy approach which inspires indigenous partaking at competitive prices that are consistent with the law.
In conclusion, the policy aims to implement full legal separation of the upstream from the midstream; establish a single independent petroleum regulatory authority; separate the respective roles and responsibilities of government and the private sector; implement full legal separation of gas infrastructure ownership and operations from gas trading and realise more of the LNG international downstream value.
It seeks to establish payment discipline throughout the energy chain; honour stability of contract terms; make a strong maintenance and safety culture a priority; establish strong linkages with electric power, agriculture, transport and industrial sectors; pursue a project-based, rather than a centrally-planned domestic gas development approach; implement international best practice for environmental protection; ensure security of assets and compliance with the Nigerian Content Act.