Mohammed Shosanya
The Managing Director and Chief Executive Officer of Nigeria LNG Limited (NLNG), Dr. Philip Mshelbila,has expressed optimism regarding the recent Executive Order on Oil and Gas Reforms signed by Present Bola Ahmed Tinubu.
He explained that the executive action will be crucial in unlocking the development of non-associated gas (NAG) in Nigeria, thereby driving domestic gas utilisation and ensuring a stable gas supply for NLNG’s growth project,Train 7.
Speaking in an interview on the Global Business Report programme on Arise Television, Dr. Mshelbila highlighted the significant impact of the Executive Order on the gas industry. He emphasised that the Executive Order would incentivise the much-needed investments, addressing specific challenges hindering ease of business and attraction of investment in the oil and gas sector.
“Nigeria holds somewhere about 38% of the reserves in Africa. However, we have only been able to attract about 5% of investment in oil and gas. This means we are punching way below our weight when attracting investment. And there’s a reason for this. Part of it is that when people want to invest, they look for certain things – returns, low risks and ease of business. If you focus on the fiscals in the Executive Order, what the government has done is look at areas that have not been addressed by the Petroleum Industry Act (PIA) or other fiscal laws that are in existence. One of those areas is what we refer to typically as Dry Gas or Non-Associated Gas (NAG).
“When natural gas occurs in the reservoirs, typically and very often, it occurs together with oil or other liquids like condensate. So, when you produce them together, you can sell the oil or the condensate and make enough money to cover your spending on developing the gas. Where you have non-associated gas, the gas is occurring alone, and you don’t have the benefit of the revenue from the condensate or the crude oil.
“You need to invest more to develop that gas because you don’t have that offset. So, one of the things that the presidential directive has done is to enable those who want to develop NAG to get the benefit of tax credits over the first 10 years of the project, after which it becomes a tax allowance. From here, they can recover their investment in NAG through those tax credits. We haven’t had this before. There are a lot of NAG fields, both onshore and in the shallow waters that have not been developed. Hopefully, this incentive will unlock the investments within this area,” he stated.
He spoke on Train 7,saying the project was progressing well at 60% completion status.
“We are more than halfway through the project’s engineering, procurement, and construction. It has been a safe construction, and the progress has been evident. At the site, you can see most of the big and heavy structures already in place. We are now focusing on ensuring that when the midstream project is in place, the gas supply is also there. One of the directives in the Executive Order is one of the things that will help us unlock the gas supply into Train 7,” he noted.
On the directive by the government to suspend exports of LPG, Dr Philip Mshelbila said NLNG domesticated LPG supply in 2022 when the Company’s Board of Directors decided to supply 100% of its LPG production to the domestic market, two years before the government’s announcement.
He emphasized that preceding the Board’s decision, since 2007, NLNG had demonstrated an unwavering commitment to supplying LPG to the market.
He noted that while all the Butane, primarily used for cooking, has been absorbed by the domestic market, the uptake of Propane, mainly used for transportation, power generation and other industrial uses, has been slower due to infrastructural challenges.
He stated that NLNG was working with stakeholders in the market to support Propane’s infrastructural development.
