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Shell Idles Six Nigerian Power Plants After Gas Shortage

Shell Idles Six Nigerian Power Plants After Gas Shortage

Nigeria’s lack of infrastructure is hampering the transportation of gas to power plants, and six plants are currently sitting idle in the country because they lack gas, according to Shell’s Nigerian unit, Shell Petroleum Development Company (SPDC).

“The reason is because we have about six power plants in this country that are standing idle that are not getting gas. The reason why they are not getting gas, even though we are flaring 800million scuf per day is that we don’t have enough pipelines to deliver the gas to the power plants,”

SPDC Senior Commercial Adviser, Upstream Gas, Emmanuel Anyaeto, said at a gas forum.

Gas producers in Nigeria are owed some US$500 million, mostly by power companies, Anyaeto said, adding that the power companies in turn are also owed huge sums, mostly by the Nigerian federal government.

The lagging payments to producers, as well as regulatory issues and tariffs, have severed the gas value chain in Nigeria, according to Anyaeto.

“The amount of investments needed to get two billion standard cubit feet, SCF, is about $6 billion —both plant, pipeline network and infrastructure. What people do not understand is that the way the gas business works, the problem is not with the investment,” Shell’s manager said.

Related: Analysts Raise 2018 Oil Price Forecasts After OPEC Deal

There are producers to make the investment, but the question is whether consumers will pay, he added.

“If the power sector can work in a way where the consumer pays, and from what it pays, every other person in the value change is paid, and then these things would work,” Anyaeto said.

The broken value chain is one of the reasons why Nigerian power plants sit idle because they lack gas, while the country flares 800 million standard cubic feet of gas per day, according to Shell Nigeria’s executive.

By Tsvetana Paraskova for Oilprice.com

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  • joli on December 07 2017 said:
    Shell always talk from both sides of the mouth.What a shame!

    After over 30 years in Nigeria, Shell is still struggling to put infrastructure in place to distribute gas to where it is needed.

    People are begging to get gas to where it is needed, yet Shell is talking about people not paying.

    Shell monopoly on Nigeria hydrocarbon acreages, especially onshore Niger Delta should be broken. Also, inland basins with both conventional and unconventional gas resources should be developed.

    The eastern Nigerian industrial heartland (i.e. Aba-Enugu-Onithsha-Nnewi axis) sits on top unconventional gas resources within the "Anambra" basin. So, there is no need to build pipelines since these resources are close to where they are needed. A "Marshal" plan should be put in place to develop unconventional gas resources in the basin.

    It is shame on successive Nigerian government since 1999 that nothing concrete has been achieved despite civilian rules that is suppose to usher in democratic dividend. They continue to dither on the most important things while pursing shallow and looting the treasury.

    Nigeria can never realized its full potential until the power issue is resolved and the power issue can never be resolved until the gas development and distribution issue is solved. Nigeria government should get her priority right.

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