Potential Game Changer, Critical Issues In Nigerian Gas Economy Over 2 Decades: An Exclusive Insight into the potentials of Gas.

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An exclusive interview with the President, Nigerian Gas Association (NGA), Mrs Audrey Joe-Ezigbo on the occasion of the 20th Anniversary of the Association.

Q. As the PNGA when the Association turns 20 years, what is your message to all the stakeholders in the industry on this milestone anniversary?

As we mark our 20th Anniversary, one thing that is clear is that the NGA has come of age as the voice of the gas industry in Nigeria. The NGA has grown from a small association of international oil companies and the Nigerian National Petroleum Corporation to a large organization with membership across the vast gas value chain, from upstream exploration and production, midstream processing and transportation, to downstream distribution, power generation and distribution companies, all the way to end-user gas-to- feedstock and gas-to-fuel companies, as well as broad range of industry,

elevated NGA to the level of a global gas association and chartered member of the International Gas Union (IGU). What this means is that we are recognized by the international coalition of country gas associations and present a formal voice for Nigeria in the global discourse of Natural Gas. We have successfully created cross-border and regional networks and investment opportunities for many of our members and positioned the NGA clearly as the leading gas association in the region.

Q. What policy direction do you propose as the next industry game changer in the next two decades?

Good question! Now while the approval of the National Gas Policy is a landmark in itself, it then brings us to the conversation of what is a clear gap that has yet to be addressed twenty years later, and that is the Petroleum Industry Bill. Any conversation about the future direction of policy that does not start from here would be remiss

and I dare say almost irresponsible. When you speak of game- changers, the PIB was to be just that. Indeed, this is the missing piece that if legislated, would, in essence, codify the provisions of the NGP into law. Indeed, it would bring

together in a coordinated manner the several different, sometimes near divergent, pieces of policy/regulation/legislation that the gas industry has been constrained to operate with for several decades now. It is most unfortunate that we have been

on the issue of the PIB since 2008 when it was first presented to the National Assembly. After several iterations and the eventual breaking of the original PIB into four bilzls, one of the bills – The Petroleum Industry Governance Bill PIGB was passed by

Further, it is imperative that policy direction moves towards the liberalization of the gas market. We cannot continue to operate under excessive regulation of gas prices. NGA and our members believe that the industry is ripe for

Willing Buyer – Willing Seller based transactions, many of which are already happening, quite frankly. In the face of a sever e-infrastructure

deficit and the need to bring in several billions of dollars into the industry to enable its growth and the multiplier growth across other gas-dependent sectors of the economy; the economics of gas projects must be assured and sustainably so. Gas projects are typically much more expensive but with slower payback periods than typical oil projects, and the continued constraining of prices below what is attractive to investors needs to be discontinued. Policy that signals liberalization will be a welcome development, and of course, we will then hope that any such policy is legislated upon in a timely manner as well.

We still have quite a long way to go. Our industry is very much in a state of flux. We have been able to get some things to work well, but a myriad of issues still need to be addressed in order to better ensure the security of our individual and collective investments and protection of stakeholder interests. On behalf of my entire Executive Council, I want to assure our members and industry stakeholders that we will continue to engage broadly, seeking for the adoption of

the legislature in 2018 but as you may know, the President denied assent when the PIGB was sent to him.

When you speak of game-changers, the PIB was to be just that. Indeed, this is the missing piece that if legislated, would, in essence, codify the

As the NGA, we are very keen to see the provisions of the NGP passage of all four

affiliate members such as legal firms, financial service institutions and the several gas industry professionals who are individual members. We have made remarkable strides in ensuring a robust engagement and representation of the NGA in all issues relating to the industry, working hard over the last twenty years to ensure the progress of the gas industry with end benefits accruing to our members and the nation at large. We have bills. We are keen to see the approval of the National Fiscal Policy as well, the reason being that these will provide much-needed clarity around the gas investment landscape for both existing and potential future projects. Clarity around the fiscal regime for gas, going forward, will help the modelling, assurance and sustainability of especially larger and longer- term gas projects; and we expect that this will also bring E & P of our Non-Associated Gas resources to the fore in the nearer term, among other benefits. With over 600Tcf of unproven gas reserves, and with domestic gas demand far outstripping domestic gas supplies, it is imperative for us to create the investment climate that will lead to a deliberate production and monetization of our NAG resources. This then is another key aspiration of the NGA and we will continue to push for these approvals in order to ensure a more robust, vibrant and successful gas industry. By the time we gather to mark our next decade as an Association, we want to see game-changing projects that have been established as a result of the attainment of these approvals.

actionable resolutions to both our legacy issues, as well as issues unfolding more recently in the face of current economic and global realities. Our approach is highly collaborative and so I also use this opportunity to again request members and stakeholders to engage more closely with the NGA, to approach us freely where there

are specific challenges which they might want us to address, to share with us any specific advocacy areas which they believe we need to focus on or do more about; the proviso being that our interventions must benefit the industry as a whole and not just one specific company, individual or sector.

Q. What is the one policy you would hail as the game-changing a piece of regulation for the Industry In the last 20 years

It would be hard to speak to anyone singular piece of policy that has been a game-changer in the industry and that is our unfortunate truth. I would rather speak to specific policy.

interventions that created and have the potential to create major shifts in the industry.

First (since we are looking at a 20-year horizon) would be the 2008 National Domestic Gas Supply and Pricing Policy and subsequent Regulations which was targeted at ensuring the growth of a vibrant domestic market for gas. Under these regulations, and in consonance with the then Gas Master Plan and infrastructure blueprint, Domestic Supply Obligations were introduced, and producers obligated to make volumes of gas available to the domestic market as determined by the Gas Aggregation Company of Nigeria (GACN). The essence of the aggregation concept was to engender price neutrality among producers between the export and domestic markets.

In addition, the domestic market was segmented into three divisions (gas-to-power, gas-as feedstock and gas-as-alternative fuel) based on their ability to bear varied gas prices. While till date, the DSO framework and aggregation continue to have challenges in terms of implementation, there is a myriad of projects which were enabled and came on-stream as a result of this regulation.

Whilst it is true that appreciably more progress could have been made in the interval between 2008 to date, the extent of domestic gas utilization projects that exist today, as well as the significant flare down from over 2Bscf/d a little over a decade ago to approximately 0.8Bscf/d of gas as at 2018, can be attributed in large part to this piece of regulation.

Fast forward several years, and mention must be made of the National Gas Policy (NGP) which was approved by the Federal Executive Council in June 2017. The NGP sets out a clear framework for Natural Gas as a stand-alone fiscal resource and industry in its own right. The overarching objective of the NGP is to move Nigeria from a crude.

oil export-based economy to a gas-based industrialized economy. It has created a much- needed decoupling of the upstream and midstream sectors of the gas industry, which will enable critical midstream infrastructure investments in the industry. It also provides a pathway for the institutional, commercial, legal and regulatory reforms that would be required to attract much-needed investments into Nigeria’s gas industry. It creates a specific recognition and direction for deepening Liquefied Petroleum Gas (LPG) penetration, and so much more. The imperative, however, remains for the nation to ensure a steady systematic implementation of the provisions of the policy if we are to see the expected results unfold in a timely manner.

Lastly and at this time, it would be good to make mention of the National Gas Flare Commercialization program which is underpinned by the National Flare Gas (Prevention of Waste and Pollution) policy and regulation of 2018. This regulation encapsulates the government’s aspiration to achieve flares out by 2020, by taking gas for free at the flare point and selling same to investors who are then able to apply various technologies to channel the gas to other productive uses. While undoubte

implementation of this regulation will not just be financial, but also environmental and with several other socio-economic benefits to the nation and people of Nigeria.

Q. The commercial structure of the Natural Gas Industry remains problematic; what is the Association currently doing?

Indeed, the commercial landscape of the gas industry in Nigeria is fraught with a litany of issues militating against the rapid growth of the industry. As NGA we are very aware of what the issues are, being that ours is an association made up of industry players. Our Executive Council also comprises experienced individuals who are themselves operators and participants across the gas industry value chain, so we are not at all removed from the issues. As the voice of the gas industry in Nigeria, NGA is the industry’s principal advocate for the advancement of the Natural Gas industry. Our advocacy efforts are aimed at ensuring there is a heightened understanding across board as to what the issues are, proposing solutions to address them, and working to foster a more collaborative approach to their resolutions. We are a solution- focused organization so, in as much as we are not afraid to

critique any areas we feel a party is not doing well, we

are quicker still to laud efforts worthy of commendation, and proffer our own basket of solutions to areas we believe need to be addressed. Our focus is always on ensuring that we find workable middle ground positions and alignment between the interests, objectives and aspirations of our stakeholder groups. Our approach is to engage in

extensive consultation with critical industry stakeholders, from our members, the executive and legislative arms of government, the various government MDA’s, as well as national and international interested parties in the industry. At a point in time in the nation such as we are currently, where a new administration has just come in, with new appointees across the various arms of government and its gas-facing

researching issues in that space and developing white papers with recommendations for industry and government consideration. We are also liaising very closely with other sector-specific industry associations to foster a shared understanding and more collaborative approach to engagement with our members on one hand, and with our policymakers, regulators and legislators on the other hand.

MDA’s, do in this regard becomes even more apparent, bringing thenew players into a better position of understanding as to the underlying commercial and other issues from an industry point of view.

NGA is also very big on thought leadership, knowledge and capacity building and so we will continue to organize several programs, some open to the public, some sector-specific, and some targeted at the government in particular; where we work to address pending commercial and related issues in the industry. We understand that it is our role to enhance the understanding about gas and the peculiarity of commercial gas operations so that it is easier for our regulators, legislators, government MDA’s and indeed the general public to appreciate the intricate workings of our industry and operations better. Over the past two years, we also introduced specific learning sessions focused on addressing legal, commercial and financial issues relating to gas investments. Indeed, we also have a Legal, Policy and Regulatory Study Group that is expressly charged with

the import of the work we

Q. What is the Associati on’s next strategic steps that would galvanize and shape the gas industry in relation

to infrastructure, policy and operational efficiency?

We will remain unwavering in our focus on ensuring the right policy reforms for the industry, and the push to get the enabling legislation in place. As it stands, we don’t have clear frameworks underpinningthemidstreamand downstream legs of the gas industry, so this is also work that we are taking on board. We want to see the PIGB, the PIAB, and the other two bills passed and we will continue to engage with the executive and legislature in these regards.

We will also not relent in our efforts to ensure a liberalization of the gas market. Appropriate pricing for gas is critical and we are working in concert with our members, partner associations and institutions to ensure detailed research is done to develop a gas pricing framework and methodology which we hope the country will adopt, as this will provide much-needed clarity for investors.

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