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National Gas Transportation Network Code goes live today

All is set for the activation of that National Gas Transportation Network Code in Abuja today.

Explaining via a video conferencing in Abuja, the Technical Adviser on Gas Business to the Minister, Mr Justice Derefaka, who doubles as the Program Manager, NGFCP, said the new scheme will deepen the nation’s oil and gas investments and further advance the economy with new industry ideas and innovations.

Business Hilights recalls the Honorable Minister of State for Petroleum Resources- His Excellency Chief Timipre Sylva launched the National Gas Transportation Network Code on Monday, February 10, 2020.

The  launching which  done as part of the opening day of the 3rd edition of Nigeria International Petroleum Summit which took place at the International Conference Centre (ICC) Abuja

The Network Code will open a vista of opportunities for investors interested in the  gas sub sector of the oil and gas industry.

As encapsulated in the National Gas Policy (2017), The Nigerian Gas Transportation Network Code which is critical to government’s objective in firming up the country’s domestic gas obligation as well as promoting export. The network code will ensure that the wrong quality gas does not go into the pipeline in addition to guaranteeing gas pipeline integrity, open access to pipeline and common understanding on metering.

The review of the Network Code licensing framework and development of all its ancillary agreements have been firmed.

The code will also provide a uniform platform in terms of guidelines for agreements between buyers and sellers which will ensure transparency and eliminate existing bottlenecks. It is a major policy thrust of government to unlocking the potentials of gas as a resource and revenue earner for Nigeria.

Technical Adviser (TA), Gas Business & Policy Implementation to the Honourable Minister of State, Petroleum Resources and Program Manager, Nigerian Gas Flare Commercialization Programme (NGFCP), Mr. Justice Derefaka

President Muhammadu Buhari (Honourable Minister of Petroleum Resources) and Minister of State for Petroleum Resources, Timipre Sylva are very passionate about it.

It is believed that the implementation of the code would provide for investors in gas, the confidence to invest heavily in the sector and enable Nigeria consolidate on the multiplier effect of gas on the economy.

Again to make 2020 as the year of gas count, my takeaway on The Gas Network Code (Mr. Justice O. Derefaka; Technical Adviser (TA) – Gas Business & Policy Implementation, To the Honorable Minister of State, Petroleum Resources.)

First, like I said in during the launch, I’d like to reiterate again that this is the best gift of the year to the gas sector and indeed the international investor community even as the Honorable Minister of State, Petroleum Resources, H.E Chief Timipre Sylva has towards the end of last year declared this year 2020 as the ‘Year of Gas’.

As you may recall, the key strategies of the National Gas Policy (approved by the Federal Executive Council in 2017) are to stimulate the multiplier effect of gas in the domestic economy; position Nigeria competitively in high value export markets, and guarantee long-term energy security in the country.

Additionally, the Nigerian Gas Master Plan, the National Gas Supply & Pricing Regulation 2008 (Which is currently undergoing intensive review by all the critical stakeholders in the gas sub sector) and the National Gas Policy 2017 all recommend the introduction of the Nigerian Gas Transportation Network Code (“NGTNC” or “Network Code”).

Once we go live on Monday, 10th August, The Network Code will a time as a gas market liberalization enabler aimed at ensuring gas pipeline integrity, open access to pipeline and common understanding on metering with a set of rules and protocols designed to govern the operations of gas network players in a way that impacts the gas market as part of efforts towards transparency and efficiency in the operation of pipelines in the country. The code will ensure transparency in the industry, guarantee fair and non-discriminatory access to gas transportation network, attract foreign investors, help to ensure that wrong gas does not go into the pipeline and ensure growth and development in the Nigerian Gas Industry.

The Network Code Go-Live aims to operationalize and harmonize gas balancing arrangements to support the completion

and functioning of Nigerian gas market, the security of supply and appropriate access to the relevant information, in order to facilitate trade and to move forward towards greater market integration.

The Network Code will also enable new ways of doing business in the Nigerian domestic gas market. And every gas meant for domestic use either for power, petrochemical or industrial, will have a single entry and exit point to cut short the sharp practices prevalent in the current supply and distribution system.

Note also that the Gas network code has been long overdue and the whole industry has anticipated the Network Code and expect to see it Go-Live. And from an investor perspective, it assures that when they invest, their gas will be operated in best practices and help in boosting the confidence of international financiers because they are always concerned about things being done properly. It will also provide them with an idea of how serious the government wants to drive the gas sector forward especially in line with HMoSPR’s declaration of the year 2020 as the “Year of Gas”.

Once the Code goes live and As part of regulatory and operational mechanism, the Network Code has other ancillary agreements and Licenses to be issued to the users of the Code. These include amongst others, Supplier, Operator (or Transporter), Shipper and Agents Licenses Framework/Accession Agreement, Network Entry/Exit (Interconnection) Agreements and Operational Balancing Agreement (OBA). There are also Business Process Documents including Capacity Registration Form, Capacity Transfer Notice, Nomination Forms (Rolling Annual Estimates, Weekly Estimates, Daily Notice, Trade Nomination, Re-nomination), Curtailment Notice, Invoice, Invoice Remittance Advice, Maintenance Notification Form, Imbalance Form in place for effective operations and functioning of the code.

In a nutshell, the Go-live of the network code system will play a vital role in ensuring that it delivers the energy that is the lifeblood of our economy, keeping our lights on, our homes warm and our businesses running.

Remember also that the Go-Live of the Network code will open up ‘New developments in the gas supply chain’. This is premised on our consideration for new developments in the use of gas. These include: (i) the intensification of gas use in the transportation sector (in both liquefied (LNG) and compressed natural gas (CNG) forms); (ii) LPG for cooking as well as for transportation and reduce deforestation and small-scale applications of LNG and CNG, including alternative means of distribution such as virtual pipelines; and, (iii) pioneering technologies that facilitate the storage of electricity in the form of hydrogen or synthetic gas (“power to gas” or P2G).

As a Government, it is important that we facilitate the emergence of these new uses of gas through appropriate interventions which is why the Hon Minister of State recently inaugurated the National Gas Expansion Programme (NGEP), stating that the country is on the verge of becoming a gas hub for the African subregion. And need to make the industry relevant to the people by touching the lives of the ordinary citizens through equitable distribution of petroleum products in the country, adding that the NGEP would serve as a catalyst for the development and  utilization of available assets whilst adhering strictly to the National Gas Policy as gazetted and reform and implement a market infrastructure strategy to promote cost-effective distribution.

That said, I believe the Go-Live of the Network Code, will assist us as a nation to realize our full potential and reap the vast benefits of a secure, fully implemented internal gas market for all its citizens. ​

The establishment of the NGEP is a deliberate attempt by government in its attempt to key into the global shift from crude oil to gas, to make 2020 count as Nigeria’s “Year of Gas” and to ensure that the nation’s abundant gas resources is adequately deployed for the good of the country and the citizenry.

The committee was charged with the mandate to reinforce and expand domestic gas supply to stimulate demand through an efficient and effective mobilization and utilization of all available assets, resources and infrastructures in the country.

Additionally, with the NGEP drive for vehicles to run on dual fuel and our partnership with the private sector and the NNPC, we are getting closer to what is currently obtainable in Egypt where Egyptian President Abdel Fattah al-Sisi announced in July that Egypt will not issue licenses to any new cars unless they run on natural gas like Autogas, CNG and LNG.

As part of the Federal Government’s strategy to re-position the gas sub-sector, the Ministry of Petroleum Resources has commenced the implementation of initiatives to foster efficiency and attract investment along the broad spectrum of the gas value chain.

According to the Ministry, these initiatives as embedded in government’s policy aspiration and encapsulated in the nation’s Gas Policy, aligns with the Ministry’s 2019-2023 nine (9) priority project deliverables vis-à-vis clusters for gas resource, rapid growth of the LPG/CNG/LNG market; development of supporting infrastructure, investment, and domestic growth.

It also includes the promotion of natural gas usage in Nigeria thereby creating alternative fuel choices for Nigerians. It is expected that this will stimulate economic growth, further improve our energy mix, drive investments and provide jobs in Nigeria.

In addition, Mr. Derefaka said apart from the nine ministerial mandate priority deliverables of the ministry from 2019-2023, the go-live of the network code could be described as *”one of the four great milestones of the Honorable Minister’s priority deliverables for the oil and gas industry”*. The others are completion of the first phase bidding round of the Nigerian gas flare commercialization program (NGFCP), which has the potential of Overall inward foreign direct investment of ~US$ 3-3.5 billion; Potential annual revenue/GDP Impact of ~US$ 1 billion; generate approximately 26,000 direct jobs and approximately 300,000 total jobs; create a new wave of opportunity for a new set of investors; usher in the beginning of the creation of the new midstream players And I terms Emissions Reduction, Once operational, projects launched under the NCFCP will reduce Nigeria’s emissions by ~13 MM tons of CO2 per year; producing 600,000 MT of liquefied petroleum gas (LPG) per year and generating 2.5GW of power from new and existing Independent Power Plants (IPPs) and that the NGFCP can become an important source of additional gas to support Power Sector Development and Recovery; the other two are the 2020 Marginal field licensing round poised to deepen the participation of Nigerian businesses in the upstream segment of the nation’s oil and gas industry in line with the Nigerian (Local) Content Act and finally, the Petroleum Industry Bill (PIB) that aims to aggregate all the Laws that govern the Nigerian Petroleum Industry from upstream to downstream sector as well as establish and clarify the rules, procedures, and institutions that will entrench good governance, transparency, and accountability in the Oil and Gas sector. If you look at it holistically, All the above four priority deliverables of the Honorable Minister of State for Petroleum Resources, it will lead to Job creation for Nigerians and strengthening of Nigerian Local Content enforcement. This applies to both human and materials resources;

Acceleration of Nigerian Skill development in the sector; Development of our abundant ’circa 203 TCF of Natural Gas that has not been fully tapped along with its potential for power generation in the country which is needed for Nigerian industrialization, Economic diversification and domestic consumption; it will also improve and maximize FG’s revenue from the Oil and Gas industry.