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Nigeria's Gas Sector: Investment Opportunities (Posted 30th Jan, 2002) Tell your friends about this page! Email it to them.

Natural Gas reserves in Nigeria are, in energy terms , at least twice that of crude oil reserves, natural gas being in the region of 124 trillion cubic feet (TCF). At present utilisation levels, this will last for over 100 years. Natural Gas is a naturally occurring gaseous mixture of hydrocarbon gases found in underground reservoir. It consists mainly of methane (70% - 95%). With small percentages of ethane, propane, butane, pentane and other heavier hydrocarbons with some impurities such as water vapour, sulphides, carbon dioxide, etc. The ethane, propane, butane, pentane etc, hydrocarbon components of natural gas are collectively called natural gas liquids (NGLs). These NGLs are found in larger quantities in associated gas streams than in non-associated gas streams. 

Natural gas is a versatile and environmentally preferred fuel as it produces no soot or ash, nor pollutants and as such has a major role to play in alleviating air pollution problems. It is also cheaper than most competing fuels and has become a major source of energy for both commercial and industrial consumers as well as a chemical feedstock for numerous processes. 

Investment Opportunities in The Natural Gas Sector

There is a host of investment opportunities in the Natural Gas industry;

Production of Natural Gas 

Interested entrepreneurs can apply to the Ministry of Petroleum Resources for appropriate licenses, to prospect for and produce oil and gas. Attractive fiscal regimes to ensure profitability of this aspect of the gas industry as recently approved by government include, but not limited to the reduction in petroleum profit tax from 85% to 65.75%.

Natural Gas Distribution

Investors are encouraged to wholly and independently own and operate natural gas distribution systems. These companies would purchase gas from NGC at various City Gates, and distribute the gas through pipelines for sale to individual domestic and industrial consumers in a specific area. There would also be opportunities to distribute gas as
Compressed Natural Gas (CNG) using tube trailers to transport it users who may not be within easy reach or close enough to our existing gas facilities.

CNG Automotive Applications

As the use of CNG as an automotive fuel becomes commercialised, there will be opportunities to invest in CNG filling stations. There will also be need for conversion workshops to convert vehicles from petrol/diesel to CNG operations, and for retail outlets to sell the CNG conversion kits.

Natural Gas Liquids

Natural Gas Liquids could be recovered from gas streams, which are richer in heavier hydrocarbons (ethane, propane, butane, pentane, etc.). These liquids have high market values and find applications either in their raw form solvents, feed stocks (for production of various chemicals) and liquid fuels or fractionated into their components, viz Liquified Petroleum Gas (LPG), Cooking Gas, natural gasoline, and various Special Boiling Point (SBP) solvents. Opportunities abound for interested third parties or private sector to invest in the establishment of NGLs extraction plants to recover natural gas liquids from major supply schemes.

Natural Gas Fired Equipment & Accessories

Natural gas is the cleanest, most convenient form of fossil fuel, and it is also cheaper than its competitors - fuel oil, diesel, and Liquefied Petroleum Gas (LPG). It is, therefore the prime choice for industrial processes of heating and drying, cooking, and baking of foods etc. This provides opportunities to invest in the marketing and servicing of gas-fired heaters, dryers, ovens, air-conditioners refrigerators and kilns etc, for a whole variety of industries.

Downstream Investment

Natural gas is a favoured feedstock for many chemical processes e.g. to make methanol, ammonia, urea fertilizers, etc. The Nigerian Gas Company would want to encourage entrepreneurs to invest in such project, for which NGC would assure regular and interrupted supply of natural gas. 

Typical Levels of Investment

In the natural gas industry, these range from the very large e.g. for exploration and production facilities in the order of hundreds of millions of dollars to quite modest amounts on the marketing side.

Conclusion

It has been established, that Nigeria is blessed with abundant reserves of natural gas. Prospects for the growth of the gas industry are enormous when viewed from the various industrial and commercial consumers that need to be served and the potential local market available for chemicals derived from natural gas, which are currently imported. The Federal Government through Nigerian National Petroleum Company, NNPC and its subsidiary, NGC, is committed to promoting and providing favourable economic environment to allow private companies (Local & Foreign) to participate in Nigeria's gas industry. 

To recapitulate, the following investment opportunities are available and private companies are highly encouraged to invest in such ventures.

  • Setting up of gas utility companies responsible for gas distribution from "City Gates" to ultimate industrial, commercial and domestic consumers in urban centers.
  • Establishing of CNG plants, conversion workshops and filling stations to commercialise the use of CNG as automotive fuel.
  • Establishment of small and large scale plants to manufacture chemicals using natural gas as feedstock. The plants can be totally owned by the interested private innovators and such companies will be free to market the products both locally and externally.
  • Commercialisation of NGLs for export or local markets either in thebulk form or as LPG and natural gasoline fractions.

Options available here are for the interested private parties to invest either solely or in partnership with NGC to set up the recovery plants and market the product locally or externally.

FOR FURTHER ENQUIRIES AND INFORMATION, CONTACT:

1. Managing Director, 2. Manager,
Commercial Department,
Nigeria Gas Company Limited Nigeria Gas Company Limited
Odin Road, Ekpan, Odin Road, Ekpan,
P.M.B 1288, Warri, P.M.B 1288, Warri,
Delta State, Delta State,
Nigeria. Nigeria.
Tel: 053-252224 Tel: 053-252328
Fax: 053-252233

3. Head, Port-Harcourt Commercial Office,
Nigeria Gas Company Limited,
49, Moscow Road,
Port-Harcourt,
P.M.B. 5342,
Tel: 084-233909, 232349

4. Head, Abuja Commercial Office,
Nigeria Gas Company Limited,
Plot 76, Yaoundé Street,
Wuse, Zone 6
P.M.B. 398
Abuja – F.C.T.
Tel: 09-5230770, 5230385.

5. Head, Lagos Commercial Office,
Nigeria Gas Company Limited,
13B, Oju-Olobun Close,
Off Idejo Street,
Off Adeola Odeku Street,
Victorial Island, Lagos.
Tel: 01-2610637, 2610637, 2610639.

6. Head, Public Affairs Department,
Nigeria Gas Company Limited,
Odin Road, Ekpan,
P.M.B. 1288, Warri
Delta State,
Nigeria.
Tel: 053-254262

Source: Nigerian Gas Company Limited.

See Also: Oil Industry

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