New gas deal to boost Nigeria’s 1.2 tcf

…GDA, Nigeria’s first agreement separating gas development from oil production

Ben Eguzozie, in Port Harcourt

A new gas commercialization deal signed by the Nigerian National Petroleum Corporation (NNPC) and Sterling Oil Exploration and Production Company (SEEPCO), a private operator of the Oil Mining Lease (OML) 143, is set to boost Nigeria’s 1.2 trillion cubic feet (tcf) of gas.

The OML 143 gas development agreement (GDA), is the first agreement in Nigeria that fully separates gas development from oil production. Tony Chukwueke, group managing director of SEEPCO described it as a major milestone for the country.

It may be a major effort for the country, however experts in the global gas value-chain believe that Nigeria was still scratching the surface in harnessing its more than 203 tcf gas deposits.

Recently, the managing director of Nigerian gas liquefaction company, Nigeria Liquefied Natural Gas (NLNG), Tony Attah urged that the country’s huge gas reserves would amount to economic waste if they remain unharnessed.

Kyari said the gas commercialization strategy of the corporation was in sync with the federal government’s National Gas Expansion Programme (NGEP); adding that the gas from the project would be processed at the Ashtavinayak Hydrocarbon Limited’s (AHL) 125 million standard cubic feet (mmscf) of gas per day gas plant located in Kwale, Delta State.

“This opens a gateway for other opportunities in the oil and gas industry, not just SEEPCO Group but for other companies too. We are happy that this will unlock significant volumes of gas which will deliver 125 mmscfd to the midstream plant that you have built. Of course, this is a great milestone for us and we are happy to do business with you. You are a very reliable partner because when you say things, you get them done,” he said.

Chukwueke noted that the arrangement would enable wholistic development of the gas potential in the block.

He further explained that the GDA was a significant step as it was the first of its kind to expressly include terms that encourage the contractor to be effective in its cost management, thereby passing on significant revenue to the Federal Government, NNPC and other stakeholders.

“I will like to take this opportunity to thank the GMD, NNPC for his contribution to Nigeria and also recommit that SEEPCO is determined to play its role in the energy industry in Nigeria,” Chukwueke reassured.

He said the development of OML 143 would bring value for the Federal Government, NNPC and SEEPCO Group which would in turn boost the nation’s economy.

The GDA is pursuant to the production sharing contract (PSC) obligations, to set out the terms for the development of the 1.2 tcf non-associated gas oil block by SEEPCO which is the contractor, with the NNPC as the concessionaire.

The additional gas supply from the project would raise the nation’s gas production profile, make dry gas available for the proposed 650 megawatts NNPC/SEEPCO independent power plant, boost in-country supply of liquefied petroleum gas (LPG) and general domestic gas utilization, increase energy security, and create job opportunities for Nigerians.