The Federal Government in its determination to generate additional 6,000 Mega Watts for power supply by December, 2009 gave a stern warning to all the Oil companies operating in Nigeria, against failing to meet the domgas obligation. At a forum held on 27th April, 2009 with the Gas Suppliers and Exporters, the GGM NAPIMS Dr. M. K. Baru reiterated the Federal Government’s efforts to realize the 6,000 Mega Watts target by the end of the year through the development of its Domestic Gas.

Dr. Baru also used this forum to urge the IOC’s to respect the Federal Government’s aspiration in this regard as the failure to comply might bring about dire consequences for them. After a short presentation on Domestic Gas Supply Obligations and Gas Export Projects, the GGM pointed out that based on a 25 year projection, there would be a short fall of 57.84 TFC which is of a great concern to NAPIMS. He then advised that Domestic Gas Utilization is still the best option as it will create better relationship with the communities, improve power supply and generate more income through companies that utilize gas for their plants.

Speaking based on experience from the West African Gas Pipeline, Dr. Baru said that Gas and Power have a lot of latent demands which could multiply when the infrastructure is put in place. He sited the example Ghana, Togo and Benin Republic where over 20 companies of various sizes are fully involved in gas utilization He said NAPIMS in its vintage position of having a helicopter view of all the resources and the link with government will convene Workshops to address technical and commercial issues that relate to strategy, funding etc. He advised the meeting on the need to refocus and examine the issues holistically with a view to achieving a win-win situation between Domestic Gas and Export Supply.

He urged the IOCs to take a critical look at the domestic gas requirements and begin to plan for the relevant infrastructure (Pipelines). They should also plan ahead on how to deploy the gas being generated through the PSCs and also plan on how to meet the demand of users and shortfall in demand. Contributing to the discussion, the Managing Director of ExxonMobil and Co-Chairman of the forum Mr. Mike Ward informed the forum that ExxonMobil has the issue of Domestic Gas on its front burner and is only trying to find an appropriate mix between the Domestic Gas and Export supply in terms of short, medium and long term; another major challenge is that of location and the historic resources in JV asset development.

While responding to the IOC’s call for more incentives on gas, Dr. Baru, said that the greatest incentive that can be given is available in the open market which is fully liberalized to achieve appropriate pricing of gas. He further informed that NAPIMS will be working closely with JV and PSC operators with significant gas reserves in a bid to draw up a 25 years plan that will encompass factors that can affect Domgas development such as maturation of the reserves, supplies sources, infrastructure, Gas Demand/ Supply and Shortfall. This plan, Dr. Baru stated, will form the platform for the realization of the Federal Government’s mandate on Domestic Gas Development. In a similar development, the GGM held another session with the exporters of Nigerian LNG product.

He used the occassion to reiterate Federal Government’s Domgas agenda and warned that if their DOMGAS obligations are not met, NNPC and Federal Government will not allow them implement their export programmes. In his own contribution, the MD. Of Brass LNG commended Fed. Gov.’s drive and also the level of awareness created for DOMGAS development by NAPIMS. He noted that there is a need for the evolution of long term export obligation plans for the use of operators because according to him, a situation whereby operators export gas at the expense of the domestic gas market is unsustainable.

In addressing the issue of Pricing, the GGM NAPIMS said that gas prices will be harmonised industry wide withthe use of the Gas Master Plan; this he observed, will be attained within the next five years; hence, price will no longer be a driver of the gas market. He further said that with the placement of appropriate infrastructure in place as done with the West African Gas Pipeline (WAGP), the potential and real market for DOMGAS will be ascertained and the DOMGAS Swap arrangement will also be encouraged.

Dr. Baru announced that a Coordination Committee will soon be set up to realize all these goals.