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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.
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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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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.