An evaluation of the potentials of natural gas in the economic development of nigeria

Thesis Overview

<p> INTRODUCTION<br>1.1 Background of Study<br>The role of energy in economic development cannot be over emphasized.<br>The nature and extent of energy demand and utilization in a national economy<br>are to a large extent, indicative of its level of economic development. With these,<br>there is no gain saying the fact that energy is required in its various forms for<br>every aspect of our social, economic and political lives. The application of<br>modern technology, to ease the modern living and modern ways of life would<br>other wise be impossible without the use of an energy source in one form or the<br>other.<br>A case study of natural gas a source of energy is being use to determine<br>the rate of economic development in Nigeria because of its abundance reserves,<br>tremendous potential, environmental friendly and its industrial and global market<br>demand. This becomes even more glaring when it is remembered that all modern<br>production activities, transportation, telecommunication etc. depend on this<br>energy resources for the realization of their full potentials. The role of Electricity in<br>the economy cannot be overstated because reliable electricity supply is vital to<br>the Nigerian economy and also to the various sectors driving that growth. Natural<br>gas then would be appreciated as it contributes the highest quota to these energy<br>sources.<br>1.2 Typical applications f natural gas<br>There are so many different applications for this fossil fuel called natural<br>gas that it is hard to provide an exhaustive list of everything it is used for. And no<br>doubt new uses are being discovered all the time, these includes<br>2<br>i Residential Applications – These includes Residential heating, Water heating,<br>Cooking<br>Commercial uses<br>– Uses in industries<br>– Natural gas in the transportation sector<br>– Electric Generator using natural gas<br>1.3 What are the potential contribution of natural gas<br>– it facilitates the growth of industries.<br>1.4 Statement of Problem<br>The ultimate recoverable gas reserves in Nigeria is 235 trillion cubic feet, but<br>the proven gas reserve in Nigeria is 187 trillion cubic feet of which 209 billion<br>cubic feet is produced annually. Out of this figure produced annually 44.82%<br>are presently fared. This level of gas still flared is capable of generating 69GW<br>of electricity and translating to lost in economic value of $5 billion dollars<br>annually.<br>Statement on domestic use of natural gas.<br>Natural gas could be distributed through pipeline to domestic and<br>commercial consumers like schools, Hotels. and Hospitals. Even for small<br>consumers located in remote areas, natural gas could be transported and<br>supplied in bottles. This not only holds for heating, but for other users of<br>energy around the home as well.<br>(iii) Statement harnessing/production of natural gas<br>Natural gas is a vital company of the World’s supply of energy. It is one of<br>the cleanest, safest, and cheapest and the most useful of all energy<br>sources.<br>(iv) Statement on natural gas a major foreign-exchange earner<br>3<br>Nigerian economy is now headily dependent n gas in both domestic and<br>export market and thereby generating as much revenue (as oil) within the<br>decade.<br>1.5 Justification for the current work<br>– Look critically at the problems associated with natural gas<br>exploration/production in Nigeria/faring.<br>– The huge investment requirement are considerable high, ranging from<br>exploitation, transmission and distribution.<br>– The high percentage of gas still being flared is so high that it can generate<br>the electric power requirement for the whole West African Countries<br>(Natural Energy policy publication)<br>– The absence of a comprehensive natural gas transportation grid t link<br>supply pints with potential demand center.<br>– The social, community and environment issues have create a potential<br>open-ended liability for effective gas production and private participation.<br>– look at the problems associated with the domestic natural gas utilization in<br>Nigeria.<br>– A major problem exist with natural gas utilization due to the inability of the<br>gas Companies to produce the gas requirement to satisfy the domestic<br>market and the non existence of a comprehensive gas pipeline network to<br>link the commodity to the consumers.<br>– The present gas production level channeled for domestic use is grossly<br>inadequate 80 billon cubic feet per annum, which is not adequate for the power<br>sector alone. Hence, the existing gas flow station requires expansion and if possible<br>building more flow station to meet the ever increasing demand for gas. Linking to<br>West African Countries, Algeria, Tunisia and plans are under way to extend it<br>4<br>incorporate a legal and regulatory framework that is attractive to private investor,<br>beneficial to Nigerians, and stimulate natural gas expansion programme.<br>(vii) Government should provide a comprehensive frame work to tackle the problem of<br>Youth restiveness in the Delta Region to encourage effective exploration and<br>exploration of gas.<br>(vii) Government should look into the integrate problems in some extension<br>infrastructure hampering direct extension or spurring of pipeline example Oben-<br>Ajaokuta line.<br>(V) No deliberate effort to exploit for gas in Nigeria to date –gas found are incidental to<br>oil exploration activities.<br>(x) Most of the existing gas facilities in the country are mostly own by the Nigeria gas<br>company which is empowered by the government.<br>1.6 How Export potential enhances market facilities.<br>Natural gas export by volume currently 4 billion standard cubic feet and plans have been<br>concluded to increase the volume to 3trillion standard cubic feet due to export demand.<br>These will necessitate building more flow station, terminals construction of new pipeline<br>network linking to other West Africa Countries (which is at 80% completion stage)<br>Algeria, Tunisia and plans are underway to extend so to key European Countries through<br>sub sea pipe network laying from Algeria to satisfy the increasing market demand for the<br>commodity.<br>1.7 Recommendation.<br>(i) Natural gas is a vital component of world’s supply of energy; it is one of the<br>cleanest, safest, cheapest and most useful of all energy sources.<br>(ii) At current production and utilization level, Nigerian gas resources could last more<br>than 100years, thereby out living that of oil which is 40 years.<br>5<br>(iii) To attract private sector instrument in gas projects through the creation of enabling<br>environment as is currently pursued by the present administration.<br>(iv) Government should provide incentives and access to long term credit facilities to<br>finance gas projects.<br>(v) Putting in place a national gas transportation grid to link supply points with<br>potential demand centre. <br></p>