Nigeria Strategic Gas Plan
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Nigeria Strategic Gas Plan Public Disclosure Authorized ESM279 71 ~ Public Disclosure Authorized . -0-So ~QAA Public Disclosure Authorized havl Energy Sector Management Assistance Programme ~~~~~~~~~~Reporl 279/04 Public Disclosure Authorized z £A 1XwA D ~ ~~~~~~~~~February JOINT UNDP/WORLD BANK ENERGY SECTOR MANAGEMENT ASSISTANCE PROGRAMME (ESMAP) PURPOSE The Joint UNDP/World Bank Energy Sector Management Assistance Programme (ESMAP) is a special global technical assistance partnership sponsored by the UNDP, the World Bank and bi-lateral official donors. Established with the support of UNDP and bilateral official donors in 1983, ESMAP is managed by the World Bank. ESMAP's mission is to promote the role of energy in poverty reduction and economic growth in an environmentally responsible manner. Its work applies to low-income, emerging, and transition economies and contributes to the achievement of intermationally agreed development goals. ESMAP interventions are knowledge products including free technical assistance, specific studies, advisory services, pilot projects, knowledge generation and dissemination, trainings, workshops and seminars, conferences and roundtables, and publications. ESMAP work is focused on three priority areas: access to modem energy for the poorest, the development of sustainable energy inarkets, and the promotion of environmentally sustainable energy practices. GOVERNANCE AND OPERATIONS ESMAP is governed by a Consultative Group (the ESMAP CG) composed of representatives of the UNDP and World Bank, other donors, and development experts from regions which benefit from ESMAP's assistance. The ESMAP CG is chaired by a World Bank Vice President, and advised by a Technical Advisory Group (TAG) of independent energy experts that reviews the Programme's strategic agenda, its work plan, and its achievements. ESMAP relies on a cadre of engineers, energy planners, and economists from the World Bank, and from the energy and development community at large, to conduct its activities under the guidance of the Manager of ESMAP. FUNDING ESMAP is a knowledge partnership supported by the World Bank, the UNDP and official donors from Belgium, Canada, Denmark, Finland, France, Germany, the Netherlands, Norway, Sweden, Switzerland, and the United Kingdom. ESMAP has also enjoyed the support of private donors as well as in-kind support from a number of partners in the energy and development community. FURTHER INFORMATION For further information, a copy of the ESMAP Annual Report, or copies of project reports, etc., please visit the ESMAP website: www.esmap.or2. ESMAP can be reached by email at [email protected] or by mail at: ESMAP c/o Energy and Water Department The World Bank Group 1818 H Street, NW Washington, D.C. 20433, U.S.A. Tel.: 202.458.2321 Fax: 202.522.3018 Strategic Gas Plan for Nigeria February 2004 Benin) fif ~ _ < J Joint UNDP/World Bank Energy Sector Management Assistance Programme (ESMAP) Copyright C 2004 The International Bank for Reconstruction and Development/THE WORLD BANK 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First printing February 2004 ESMAP Reports are published to communicate the results of ESMAP's work to the development community with the least possible delay. The typescript of the paper therefore has not been prepared in accordance with the procedures appropriate to formal documents. Some sources cited in this paper may be informal documents that are not readily available. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, or its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. The World Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility whatsoever for any consequence of their use. The Boundaries, colors, denominations, other information shown on any map in this volume do not imply on the part of the World Bank Group any judgment on the legal status of any territory or the endorsement or acceptance of such boundaries. The material in this publication is copyrighted. Requests for permission to reproduce portions of it should be sent to the ESMAP Manager at the address shown in the copyright notice above. ESMAP encourages dissemination of its work and will normally give permission promptly and, when the reproduction is for noncommercial purposes, without asking a fee. CONTENTS Acknowledgments ...................... xiii Abbreviations and Acronyms ...................... xv Units of Measure ...................... xx Conversion Factors ...................... xxi Executive Summary ...................... I 1. Scope of Work .11 Current situation in Nigeria .11 Driving Forces for Change in Nigeria .13 Barriers to Development in Nigeria .14 2. The National Gas Strategy .15 General .15 Government Policy .17 Resources .19 Current Oil and Gas Reserves .19 Undiscovered (Yet-To-Find) Reserves .23 Production .27 Production by Operator .27 Current and Forecasted Production of Remaining Reserves . 28 Cost of Gas Supply .33 Gas Pricing Issues .37 Price Regulation and the Institutional Role of the Regulator 39 Approach to Setting the Gas Price Level .40 Nonprice and Other Contract Clauses .40 3. Gas Utilization Options and Competition .41 Introduction .41 Development of the Resource .41 iii Gas Utilization Options ................................... 41 Typical Gas Utilization Projects ................................... 41 Priority 1: ................................... 41 Gas Usage of Typical World-Size Plants ................................... 42 Population ................................... 46 Nigeria's Competitors ................................... 49 Angola ................................... 50 Equatorial Guinea ................................... 50 Gabon ................................... 51 Democratic Republic of Congo ................................... 51 Congo Brazzaville ................................... 51 Cameroon ................................... 51 Mozambique ................................... 52 Namibia ................................... 52 Saharan Africa (Libya and Algeria) ................................... 53 Egypt ................................... 53 Chile ................................... 53 Venezuela ................................... 53 Trinidad and Tobago ................................... 54 North America ................................... 55 4. Current Gas Utilization Project and Plans .................. ................. 57 Existing Projects ................................... 57 Nigerian LNG Project ................................... 57 Domestic Consumption Projects ................................... 59 Power Sector ................................... 59 LPG Sector ................................... 68 Cement Sector ................................... 70 Fertilizer Sector ................................... 71 Aluminum Sector ................................... 72 Steel Sector ................................... 73 iv Small I ndustry ................................................. 74 Commercial, Residential and Other Sectors ..................................... 74 Proposed Export Projects ................................................ 75 Proposed Major Nonpipeline Export Projects .................................... 75 Proposed Additional LNG Projects ................................................ 75 Proposed GTL Projects ................................................ 78 Proposed Pipeline for Export from Nigeria ........................................ 79 5. Implementation Issues ................................................ 85 Observations: Perspective of Participants in Gas Developments ................. 85 General ................................................ 85 Contractual Rules for Gas ................................................ 86 Gas and Project Planning-Government Policy and Framework .................. 86 Legal ................................................ 88 Fiscal ................................................ 88 Oil and Gas Sector Framework ................................................ 91 Financial and Project Management ................................................ 93 Investment Promotion ................................................ 93 Investment Generating Activities ................................................ 94 Investor Servicing Activities ................................................ 94 Industrial Development Vehicles ................................................ 94 Industrial Parks ................................................ 94 Export Processing Zones (EPZs) ................................................ 95 Human Resources ................................................ 97 6. Conclusions and Recommendations ................................................ 99 Gas Reserves and Gas Usage Options ................................................ 99 Technical and Implementation Action Plans ............................................... 103 Planning ................................................ 103 Policy, Strategic Objectives, and Priorities ................................................ 105 Appendix 1: List of Reports Provided by the Nigerian Government via the World Bank and other Data and Reports Evaluated .............................. 109 v Reports/PowerPoints Supplied