In a significant move to bolster domestic gas utilization, the Nigerian government, through the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), has granted 25-year gas distribution licenses to ten companies. These licenses authorize the establishment, construction, and operation of gas distribution networks in strategic urban centers, including Lagos, Ibadan, Port Harcourt, and Benin City. The initiative aims to ensure that natural gas reaches both residential and industrial consumers across clusters in the southwestern and southern regions of Nigeria.

Award Ceremony Highlights

The award ceremony, held on Tuesday in Abuja, featured a keynote address by NMDPRA’s Authority Chief Executive, Ahmed Farouk. He announced that the Nigerian National Petroleum Company Limited (NNPC), Shell Nigeria Gas Limited, NIPCO Plc., Central Horizon Gas Company, Falcon Corporation Ltd, and Axxela were among the recipients of the licenses. Farouk emphasized that the selected areas are already connected to the Escravos-Lagos Pipeline System, facilitating efficient gas distribution.

Selection Process and Capacity Details

Out of 30 applications received, 20 were screened out, leaving the top ten recipients to spearhead the first phase of this gas expansion initiative. The awarded clusters and their respective operators are as follows:

• Agrara, Ota, and Badagry Local Gas Distribution Zone: Operated jointly by NNPC and Shell, with a capacity of 102 million standard cubic feet per day (MMSCF/D).
• Greater Lagos Industrial Area (GLIAS Local Gas Distribution Zone): Managed by NNPC and Gaslink, boasting a capacity of 130 MMSCF/D.
• Ikorodu Local Gas Distribution Zone: Operated by NNPC and Falcon, with a capacity of 25 MMSCF/D.
• Kara Bridge-Ibafo-Sagamu Interchange Local Gas Distribution Zone: Managed by NNPC and NIPCO, with a capacity of 150 MMSCF/D.
• Lekki Free Trade Zone Local Gas Distribution Zone: Operated by NNPC and NIPCO, with a capacity of 25 MMSCF/D.
• Ogere-Ibadan-Oluyole-Olorisako-Asuire-Ajoda Local Gas Distribution Zone: Managed by NNPC and NIPCO, with a capacity of 150 MMSCF/D.
• Port Harcourt Cluster 2 Local Gas Distribution Zone: Operated by Central Horizon Gas Company (CHGC), with a capacity of 50 MMSCF/D.
• Port Harcourt Cluster 1 Local Gas Distribution Zone: Managed by Shell, with a capacity of 30 MMSCF/D.
• Ada Local Gas Distribution Zone: Managed by NNPC, with a capacity of 30 MMSCF/D.
• Benin Local Gas Distribution Zone: Operated by NIPCO, with a capacity of 20 MMSCF/D.

Collectively, these licenses will enable the distribution of over 1.5 billion standard cubic feet of gas per day through a 1,200 km gas pipeline network and more than 500 customer stations.

Strategic Objectives and Economic Impact

Ahmed Farouk highlighted the broader objectives of this licensing regime, stating, “This license regime holds a significant opportunity to support the development of our domestic gas market through the supply of gas to our energy and testing industries, industrial parks, special economic zones, embedded captive power generation, mobility CNG schemes, and any other downstream gas utilization program.” He further emphasized that the initiative is expected to create opportunities for profitable investment for various stakeholders, improve the socio-economic impact of gas resources across Nigeria, and support the nation’s energy transition plans.

Government’s Commitment to Infrastructure Development

The NMDPRA has expressed its commitment to encouraging public-private partnerships to expedite the development of gas infrastructure. The government will provide support through regulatory oversight and a mid- and downstream gas infrastructure fund embedded under the authority, while private companies will bring in the expertise and investments needed to drive the projects forward.

Ministerial Insights

Hon. Ekperikpe Ekpo, the Minister of State for Petroleum Resources (Gas), underscored the significance of the license regime as part of the federal government’s “last mile” gas expansion program. He noted that the licenses provide “an exclusive right to establish, construct, and operate gas distribution systems and ensure the non-discriminatory distribution and sale of natural gas within designated local distribution zones.” Ekpo also highlighted the critical role of gas in Nigeria’s energy transition and economic transformation.

NNPC’s Investment in Gas Infrastructure

Mele Kyari, the Group Chief Executive Officer of NNPC Limited, announced that the company and its partners are investing $500 million to construct five liquefied natural gas plants in Ajaokuta, Kogi State, as part of efforts to boost gas distribution. Represented by Executive Vice President, Gas and Power, Ogunleye Olalekan, Kyari assured license holders of an adequate supply of gas across the franchise zones and urged stakeholders to support the federal government’s plans to improve gas supply and utilization.

Conclusion

The issuance of these 25-year gas distribution licenses marks a pivotal step in Nigeria’s efforts to enhance domestic gas utilization, stimulate economic growth, and support the nation’s energy transition. By fostering collaboration between public and private sectors, the initiative aims to build a robust gas distribution infrastructure that will benefit industries and households across the country.