Expert tasks Kyari on cost-reflective tariff on domestic gas

An Oil and Gas Expert, Mr Chikezie Nwosu, has advised the new Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Mr Mele Kyari, to find a business model that guarantees end users’ payment for domestic gas used.

Nwosu, former Chairman, Society of Petroleum Engineers (SPE), Nigeria Council, gave the advice in an interview with our reporter in Lagos on Saturday.

He advised that domestic gas payment should be reflective of the volatility in the exchange rates between the currency of investment (typically the United States Dollar) and the currency of payment (the naira).

Nwosu said that the first step is to make assets that have predominantly dry gas (no reliance on a condensate stream) profitable before stability in the domestic gas market is achieved.

He urged government to incentivise tools like tax holidays, some manner of ‘subsidies’ (which can come in the form of reduced or deferred royalty payments, production allowances etc.) and most importantly, securitisation of payments, would be great enablers.

Nwosu said that Kyari had already noted that government must vigorously pursue frontier basins, new technology that can unlock erstwhile commercially- challenging hydrocarbon resources.

“We need to remember that at some time, shale oil and gas were commercially unattractive but fracking and other related technologies developed rapidly to address this.

“Same approach can be adopted for the frontier basins.

“Stakeholders and professional organisations need to be pulled into a government ‘Think Tank’ affiliated to the Nigerian Economic Summit Group and the National Economic Council.

“They have gotten the resources, technical and commercial know-how, international perspective and connections to support government in revamping the economy, leveraging on the vast oil and especially gas resources,’’ he said.

Nwosu commended President Muhammadu Buhari for appointing a thoroughbred industry personality to take over from Dr Maikainti Baru, who retired recently.

“Kyari is a brilliant geologist who is excellently fit for the GMD NNPC position. The President could not have made a better choice,’’ he said.