Nigeria's oil ministry to present draft oil policy next week

Nigeria is on the brink of a significant development in its oil and gas sector as the Ministry of Petroleum Resources prepares to present the draft National Oil and Gas Policy to the Federal Executive Council next week. The policy is set to revolutionize the gas industry in Nigeria, unlocking the vast potential of the country's gas reserves and attracting much-needed investments. In a recent interview with CNBC Africa, oil and gas consultant, Lukman Agboola, discussed the implications of the new policy and its potential impact on the sector. Agboola highlighted the importance of harnessing Nigeria's gas resources, emphasizing that the country is more of a gas country than an oil producer. He pointed out that the policy proposes a production sharing contract (PSC) structure that incentivizes investors to recover their investment and make profits before other deductions, making it an attractive proposition for potential investors. Agboola also emphasized the role of the policy in promoting clean energy use within the domestic economy, aligning with global trends towards sustainability. One key point raised in the interview was the issue of pricing in the gas sector, which Agboola identified as crucial for attracting investments. He stressed the importance of creating a competitive economic environment and implementing an attractive fiscal policy to encourage investment in the sector. Agboola highlighted the need for clarity on how the sector would be segmented, particularly with regards to upstream exploration and production and downstream infrastructure development. Another key point of discussion was the evolving global gas market and the potential shift towards trading gas on the spot market in the future. Agboola noted the changing dynamics in long-term gas contracts and the growing importance of demand and supply in determining pricing and market trends. The interview also touched on the significance of the local gas industry for power generation needs in Nigeria. Agboola expressed optimism about the potential for local gas champions to emerge and contribute to the growth of the sector. He cited examples of local companies already making significant strides in the gas industry and highlighted the role of the new policy in attracting more investments to support the development of local gas infrastructure. However, one critical challenge that remains for the sector is the security risks posed by sabotage and attacks on gas pipelines in the Niger Delta region. Agboola acknowledged the need to address security concerns to ensure the stability and growth of the gas industry in Nigeria. He emphasized the importance of resolving these issues to prevent disruptions that could impact the entire domestic economy, considering the essential role of gas in various sectors. In conclusion, Agboola's insights shed light on the transformative potential of Nigeria's upcoming National Oil and Gas Policy for the gas sector. The policy aims to create a conducive environment for investment, promote clean energy use, and support the development of a robust local gas industry. However, addressing security challenges will be crucial to safeguarding the sector's growth and ensuring a sustainable future for gas in Nigeria.