Paragraph 1: The Nigerian government, through the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), has taken a significant step toward expanding domestic gas utilization by issuing 25-year gas distribution licenses to ten companies. This initiative aims to bring natural gas directly to homes and industries, particularly in the southwestern and southern regions of the country. The licenses cover franchise areas in major cities like Lagos, Ibadan, Port Harcourt, and Benin City, primarily focusing on areas already connected to the Escravos-Lagos Pipeline System (ELPS). This strategic approach leverages existing infrastructure to accelerate the reach of natural gas distribution networks. The awarding of these licenses marks the first phase of a broader national gas expansion initiative, designed to unlock the vast potential of Nigeria’s abundant natural gas resources.
Paragraph 2: Thirty companies initially applied for the licenses, but following a rigorous screening process, only ten were selected based on their demonstrated capacity and investment in gas distribution infrastructure development. The chosen companies, including industry giants like the Nigerian National Petroleum Company Limited (NNPC), Shell, Nipco, Central Horizon Gas Company (CHGC), Falcon Corporation, and Axxela, will play a crucial role in establishing and operating the gas distribution networks within their designated zones. The allocation of zones and capacities was carefully determined, ensuring a strategic distribution of resources and coverage. For instance, NNPC, in partnership with Shell, will operate the Agrara, Ota, and Badagry Local Gas Distribution Zone, while NNPC and Gaslink will manage the Greater Lagos Industrial Area Zone, reflecting the concentration of industrial activity in that region.
Paragraph 3: The awarded licenses cover a wide range of capacities, catering to diverse consumption needs. The distribution zones range from smaller capacities like the Ikorodu Zone with 25 million standard cubic feet per day (MMSCF/D), managed by NNPC and Falcon, to larger capacities like the Ogere-Ibadan-Oluyole-Olorisako-Asuire-Ajoda Zone, with a capacity of 150 MMSCF/D, operated by NNPC and Nipco. This variety in capacity reflects the differing demands across various regions and industries. In the South-South region, companies like CHGC and Shell will manage zones in Port Harcourt, while NNPC will oversee the Ada Zone and Nipco the Benin Zone, further diversifying the participation and geographical coverage of the program.
Paragraph 4: The NMDPRA Chief Executive, Ahmed Farouk, highlighted the immense potential of this initiative. The combined capacity of the licensed zones is estimated at approximately 1.5 billion standard cubic feet per day (BSCF/D), delivered through a network of over 1,200 km of gas distribution pipelines and more than 500 customer stations. This significant investment in infrastructure will not only enhance gas access but also stimulate economic activity and job creation. The licenses are projected to attract further investments in the gas sector, promoting the development of new markets and supporting Nigeria’s energy transition goals. This move towards cleaner energy sources is particularly relevant in light of the health and environmental concerns associated with traditional cooking fuels.
Paragraph 5: The licensing initiative aligns with the Petroleum Industry Act (PIA) and the Gas Distribution Regulations of 2023, reflecting the government’s commitment to a comprehensive and regulated gas market. Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, emphasized the importance of bringing gas supply closer to consumers nationwide, thereby addressing the challenges associated with access to clean cooking fuel, a major concern affecting millions, particularly women and children. The program is designed to promote sustainable development and improve living conditions across the country. By providing a reliable and affordable energy source, the initiative aims to support various sectors, including energy-intensive industries and power generation, contributing to overall economic growth and competitiveness.
Paragraph 6: The NNPC, a key player in this initiative, has committed significant investment in gas infrastructure. Group Chief Executive Officer, Mele Kyari, announced a $500 million investment in the construction of five liquefied natural gas (LNG) plants in Ajaokuta, Kogi State, further reinforcing the commitment to expanding gas supply and utilization. This substantial investment complements the licensing program, ensuring adequate gas availability across the franchise zones. Kyari urged stakeholders across the industry to support the government’s efforts in developing the gas sector, recognizing its potential for economic growth and transformation. The NMDPRA further affirmed its commitment to providing regulatory support and ensuring the timely completion of critical gas infrastructure projects, such as the OB3 river crossing and the Ajaokuta-Kaduna-Kano (AKK) pipeline. The authority is also working on revising the Gas Transportation Network Code and the gas pricing framework to ensure efficiency, fairness, and competitiveness within the sector.
