FG orders NNPC to meet local gas demand

A PRESIDENTIAL directive to the Nigerian National Petroleum Corporation to meet the country’s gas demand by December this year has caused the management of the corporation to return to the drawing board.

NNPC Group Managing Director, Dr. Mohammed Barkindo, who hinted of the presidential mandate at the weekend in Lagos, said the Federal Government has provided the incentives to achieve the goal.

According to him, since last year, the government had improved on the funding of gas projects to ensure that the commodity is available for industrial and domestic use.

Barkindo told journalists after visiting NNPC facilities in Lagos and Ogun states that as a demonstration of its commitment to meeting local gas need, the government had increased the funding of gas projects from $1 billion last year to $1.5 billion this year.

This brings the budget for development of the sector in two years to $2.5 billion (about N375 billion).

He expressed delight that the National Assembly had already passed this year’s budget for the sector and told the corporation’s workers that the onus was on them to meet the presidential mandate.

Barkindo said that he embarked on the tour to get first hand information of all the NNPC facilities and to sensitise the members of staff on the on-going reforms in the industry.

The NNPC boss said that government had made the development of the nation’s gas industry a priority and charged the management and employees to rise to the challenge.

He said government took the bold step to invest hugely in the gas sector because of its huge deposit in the country.

Barkindo said that President Umaru Musa Yar’Adua had also directed the NNPC to ensure adequate gas supply to the power sector to meet his plan to raise electricity generation to 6,000 megawatts (MW) by the end of this year.

He noted that 2009 is a challenging year for the NNPC, as it must not fail to meet the Presidential directive.

“Let me tell you, the issue of gas pipelines and its networks, particularly the critical ones are being addressed at the highest level of government. It therefore shows that the ball is in our court. We must to rise to the challenge by ensuring the delivery of the required quantity of gas within the timeframe as we have agreed with our counterparts in the power sector that by December this year, we must deliver on the Federal Government’s target of 6,000 MW power generation. So the deal is non-negotiable, as it is one of the priorities of the President. So, we have to discuss on how to achieve this objective,” Barkindo said.

He said the drastic fall in the price of crude oil in the international market coupled with the current global meltdown had made the work of the national oil company difficult, adding that it was high time for the country to shift focus to developing the gas sector.

With about 187 trillion standard cubic feet of gas, Nigeria, he said, ranks seventh on proven natural gas reserves in the world, but most of which had been targeted for export.

On funding, Barkindo said: “Let me say that for the first time, the National Assembly approved about $1 billion for domestic gas production in the 2008 budget, while $1.5 billion was approved in this year’s.

At the National Petroleum Investment and Management Service (NAPIMS) corporate headquarters in Ikoyi, Lagos, the NNPC chief commended the agency for being on course in spite of the challenges facing the sector and urged the agency not to relent on its efforts because its activities affect the country’s entire oil and gas industry.

He noted that the agency’s role is very important to the way the direction of oil and gas industry is positioned in the country, adding that NAPIMS is the interface with the joint venture operations in the country.

Barkindo said the Oil and Gas Implementation Committee (OGIC) reform had spelt out the objectives and how the industry would be run.

He disclosed that a panel would soon be inaugurated to begin the winding up of NAPIMS and transformation into the National Petroleum and Allied Management Agency (NAPAMA).

“I can tell you that we in the NNPC management are already discussing how to set up a panel to start the winding up of NAPIMS in which the agency would be mid-wife into the NAPAMA.

“We want to begin to work out the modality in harness because the beauty of OGIC is that it has spelt out a gross objectives where the direction of the industry should go. So how to get there is the task before us,” Barkindo added.

Also, American oil giant, Chevron Corporation, has said its investment in Gas To Liquids (GTL) project in Nigeria was being reviewed and may be delayed by one year before commissioning.

Its local subsidiary, Chevron Nigeria Limited handles the GTL project. The U.S. firm was quoted by agency reports at the weekend as saying that the Nigerian plant that would convert gas to liquids become operational in 2013 instead of 2012.

The reports said the cost had risen from the initial estimate to $7 billion before completion.

But Chevron’s General Manager, Policy, Government and Public Affairs, Mr. Femi Odumabo, denied any such development, saying “the dates you have quoted were not correct, we are looking at first quarter of 2011 for the commissioning of the project.”

Odumabo in a telephone chat with The Guardian said the cost of the project, now being looked at by the company and the NNPC is $5.95 billion (about N856.8 billion).

“The cost we are looking at is $5.95 billion and our partner, the NNPC is collaborating with us in reviewing the cost,” he stated.

The plant, located 60 miles (100 km) southeast of Lagos, will produce 34,000 barrels, 10,300 barrels per day of Naptha and 900 barrels daily equivalent of LPG of oil equivalent per day.

Chevron said a Phase 3A expansion of the Escravos Gas Plant, which will feed the $5.95 billion GTL plant, would start production in 2010.

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