7 THINGS TO KNOW ABOUT THE NATIONAL GAS POLICY IN NIGERIA

1. Bespoke Gas legislation

There shall be a bespoke legislation that recognizes gas as a fuel and revenue earner in its own right. The bespoke gas legislation shall address: (a) regulation of a dedicated gas industry (including the development of the mid and downstream gas sectors), (b) Pricing (c) licensing of different activities in the gas chain from exploration to final consumption, (d) separation of gas infrastructure ownership and operations from gas trading (e) gas specific fiscal regime (f) competition regulation.

2. Competitive gas pricing – albeit with transitional buffers

The Gas pricing framework will be clarified by a revised National Domestic Gas Supply and Pricing Regulation. Wholesale gas pricing will ultimately be market-driven however there shall be a transitional phase of price regulation, which shall be for a short period. Gas price regulation shall continue to apply in instances of monopoly of infrastructure.  

During the transitional period, parties may engage in transactions on a willing buyer – willing seller basis once they have met their DSO obligations.

3. Gas to Power

Gas supply to the power sector is a top priority. The government shall imminently address prevailing power sector risks to enable bankable gas supply arrangements to the power sector.

Under the policy, the government intends to maximize utilization of associated gas to be treated for supply to power generation.

4. New fiscal framework for gas 

Gas is a hydrocarbon and a revenue earner in its own right and should be exploited on the basis of its economic value and not only as a by-product of oil exploration. Therefore, the policy seeks to stimulate capital investment in upstream, midstream and downstream gas activities by suggesting a reduction in royalties and gas tax rates in addition to other investment incentives.

5. Deliberate gas development

The government is expected to develop a model Gas Development Agreement containing its terms for the development of gas resources in PSC concessions.

6. Gas Flaring Penalties

Government to increase gas flaring penalty to an appropriate level sufficient to de-incentivize the practice of gas flaring whilst introducing other measures to encourage gas utilization.

7. Gas development as a condition for renewal of OMLS

Renewal of licenses and leases shall be subject to a commitment by the licensee or lessee to the development of the discovered gas resources within the license or lease area for domestic or export project, as applicable.