Download NIGERIA: A CAPABLE GAS HUB FOR REGIONAL AND

NIGERIA: A CAPABLE GAS HUB FOR REGIONAL AND
INTERNATIONAL MARKETS
-BOLAJI OLATUNBOSUN OSUNSANYA
Bolaji Osunsanya, the Chief Executive Officer, OGP and Incoming NGA President, comes across as a combination of rational
practicality and ‘glass- is -really-half-full’ optimism. He is well aware of the many challenges that NGA and the natural gas industry
face, but he so much prefer to talk about the opportunities.
He is also a strategic thinker of the first order, which, interestingly, has reinforced his intuitive wariness about radical change. Indeed,
Bolaji believes that talking things through, developing a plan, making adjustments where necessary in accordance with that plan, and
making gradual but steady progress is the right approach not only in terms of the natural gas industry, but also in terms of his leading
NGA as President for the next two years.
What are Bolaji priorities as NGA 2014-2016 President?’We shall expand the catchment for the NGA to include not just practitioners
but all relevant stakeholders, and our international outreach through the IGU and other progressive alliance will receive more
attention. The capacity building objective for members will be pursued more vigorously, as I believe members must receive direct
value for their participation in the association.’
Bolaji Osunsanya in conversation with the Publicity Secretary/Editor, Nigerian Gas Magazine-Odion Aleobua. Excerpt:
You are the CEO of a leading gas and power company and Incoming President of the Nigerian Gas Association, what does
this mean to you?
The challenge of leading the Nigerian Gas Association (NGA) is one I welcome whole-heartedly. As you know, the NGA is
the umbrella body for participants in Nigeria’s gas industry, and it is very important that we maintain our focus on the growth
and development of the gas industry. Research has shown that gas has the potential to be a fundamental driver for Nigeria’s
industrialisation, and the company I lead will join other institutions and individuals to take the industry to the next level.
And, how would you describe the Nigeria gas sector now?
The gas sector has come a long way from the early days, however there is still a lot that needs to be done. We have
witnessed significant improvements in the sector in the past couple of years. Most notable are the reforms in the gas sector in
the form of the Nigerian Gas Master Plan, as well as the ongoing power sector reform. Gas producers have been incentivized
to develop gas fields for domestic consumption and improvements have been experienced in infrastructure development and
maintenance. In addition, a growing number of industries are beginning to better understand and appreciate the advantages
inherent in the gas option to their operations, and government has played a more prominent role in ensuring better structure
and regulations in the industry. We still need to focus on the few gaps for a dynamic development of the sector.
How has working in the oil and gas sector affected your view about the country, its people and the gas sector?
My experience thus far has opened my eyes to the enormous potentials existing in the country. Nigeria, through its relatively
untapped natural resources, presents numerous opportunities for businesses. Notwithstanding the associated risks inherent in
doing business in the country, huge opportunities exist for business growth and development as we have experienced in the
financial services, telecommunications, fast moving consumer goods, and manufacturing sectors. The gas sector particularly
can serve as the cornerstone for large-scale industrial development in various sectors with a medium term regional and long
term international impact.
What are your concerns and optimisms on Indigenous Gas operators’ impact on the domestic growth of the economy?
Indigenous gas operators have a significant role to play in the domestic growth of the economy. Due to the strong correlation
between power and economic development, achieving success in the development of the domestic gas sector is key to
moving the economic development of the country forward. History shows that the interest of IOCs in the country’s gas
resources is geared mainly towards the international market for several reasons. Domestic gas development would therefore
most likely be spearheaded by indigenous gas operators, and indeed we have started to see examples of such. Indigenous gas
operators should continue to be encouraged and the government should provide policies that enable them to thrive in the
sector, as the Nigerian economy will thrive even more if this is achieved.
What do you want to see happen and not yet present in FGN Gas agenda and its impact on natural gas value chain?
I believe we need a full implementation of the NGMP framework to achieve a commercial market, driven solely by the forces
of demand and supply. An intervention fund should also be established to accelerate gas infrastructure development, as well
as dedicating a couple of non-associated gas fields for the domestic market to jump-start the NGMP.
What areas present the best growth potential to those seeking opportunities and to attract investment to Nigeria gas
sector?
The entire gas sector value chain provides unique opportunities, and depending on an investor’s strategy, investments can be
made in any segment of the value chain. The upstream segment which involves gas production and processing is highly
capital intensive and though characterized by higher risk, holds potentials for huge returns, especially given the strong
domestic demand. The power sector alone requires an enormous amount of gas to help bridge the power supply gap.
The midstream and gas transmission aspect which involves gas processing and transportation is also very viable, as there
exists a ready market in the areas of manufacturing and industrial concerns and this sector holds opportunities for investors
desirous of stable and attractive investment returns.
What are the incentives to invest in power when gas supply is unsure?
Recent developments and pronouncements in the gas and power sector such as the privatisation of the power assets, upward
review of gas to power prices, and the proposed review of power tariffs which will take place towards the end of this year
demonstrate the positive and important changes being witnessed in the sector and is an indication of the long term direction
of the gas sector. The ready and ever growing domestic power demand also provides a platform to guarantee a vibrant future
for the gas sector, and government has also introduced various incentives to benefit investors in both sectors. If ever there
was a best time to invest in the sector, the time is now.
What is the reality of upstream gas investment when fiscal incentives are uncertain and unsure?
The Government has performed quite well in providing fiscal incentives for gas producers, though there is room for
improvement. The recent upward review of the gas price to power is key and will play a significant role in ensuring
investment in the upstream gas sector. The Central Bank is also playing an increasingly active role in ensuring that priority is
given to the development of the gas sector. In addition to the proven ready market, these steps should help spur further
investments in gas fields’ development, and when the PIB is passed, it will bring a level of much-needed commercial
certainty to the industry.
What is your take on the level of human resources that are required to ensure further progress of the gas industry in
Nigeria? What would you like to see happen?
There is a skills gap in terms of what is required for the full natural gas chain, however the gap is being bridged gradually but
surely. The Nigerian Content law has also encouraged local firms to invest in the acquisition of more advanced technical
skills, personnel and equipment. This should be encouraged and sustained. Given how critical the gas sector is to national
development, the sector should move away from outsourcing such skills towards indigenous development and retention.
What about the mitigation of climate change and gas flare down. What do you think is appropriate at this point?
The preference for flaring is largely due to the following: absence of infrastructure to enable monetization efforts; huge
investment in processing the gas to acceptable specifications; less than desirable returns dictated by the current domestic gas
pricing. Flaring and the present associated penalty therefore creates an easier outlet for the gas producers.
A more stringent flare down policy supported by an enabling environment for the gas producers particularly on the
commercial side is required for any sort of success in this area. A better argument must be created for gas producers to
monetize the gas produced as against flaring.
Where are the most attractive opportunities in the global gas markets now? Is the honeymoon over for LNG with
growing interest in Shale gas?
The relevance of LNG still remains despite the discovery of shale gas. Currently, the United States is the only country
actively engaging in the development of its shale gas deposits. Other countries still utilise the conventional gas as it is
deemed the readily available and cheaper option. Asia, particularly remains a ready long-term market for LNG export.
Strategically, LNG would also provide a short to medium term solution particularly in developing economies to help meet
gas demand for power, manufacturing and industrial uses.
What should be the strategic objectives of Nigeria in line with the above reality?
Nigeria has all it takes to emerge as a regional gas hub serving both regional and international markets. The eagerness of
Europe to diversify its gas sources also offers a unique opportunity for Nigeria, which has the 8th largest proven natural gas
reserves in the world. Nigeria has a significant long term role to play in the global energy market, and should ensure the
necessary steps are taken now to make that a reality in the years to come.
Indeed, NGA has the credit of promoting domestic gas commercialisation and utilisation when there was no
government input or a coherent policy for the sector. From your standpoint, will you say Nigeria is on the march in
harnessing its domestic gas opportunities and economic integration with gas?
Nigeria’s development as a nation and particularly on the economic front is tied, in the long term, to harnessing its natural
gas resources and utilising them appropriately. We are on the right track, however, there is still a lot of work to be done to
harness the benefits that a gas-driven economy can produce. We have a very good start with the Nigerian Gas Master Plan
that requires proper and deliberate implementation towards achieving the stated goals.
What do you see in the future for NGA and the gas sector in Nigeria in the next two years you will be leading the
association?
I intend to do my best in addressing existing shortcomings in the Nigerian Gas Industry by working together with the
Government and all stakeholders in the sector. The major focus will be on improving domestic gas utilisation. The challenges
of the sector are well-documented and all hands must be on deck to ensure that they are surmounted. I believe the NGA has a
significant role to play in helping drive government policy and focusing investors on the right areas to ensure sector growth.
As an organisation, the NGA can ensure it grows to become the first point of contact when it comes to the Nigerian gas
industry, domestically and internationally. Our success in this area can only be good for the sector.
We shall expand the catchment for the NGA to include not just practitioners but all relevant stakeholders, and our
international outreach through the IGU and other progressive alliance will receive more attention.
The capacity building objective for members will be pursued more vigorously, as I believe members must receive direct
value for their participation in the association.
Lastly, the triennial World Gas Conference of International Gas Union(IGU) hold in Paris next year, what will be
Nigeria vis a vis NGA agenda at this platform?
As earlier stated, significant investment in the sector is required and the focus must be on attracting the needed investment.
Investors’ fears need to be allayed and the sector’s long-term viability and rewards impressed. We will encourage and
organise members of the association to seek a national platform at this event to showcase Nigeria’s gas promise.
Mr. Mobolaji Olatunbosun Osunsanya is the Chief Executive Officer of Oando Gas and Power Limited (OGP), a position he has held
since January 2004. He was appointed as an Executive Director of OGP’s parent company, Oando PLC. in June 2007. He has also
served as the Chief Marketing Officer - Commercial of Oando Marketing PLC, and has over 28 years of wide-ranging experience in
the Consulting, Finance, Oil and Gas sectors.
His primary responsibility is diversifying OGP’s existing portfolio beyond gas distribution to gas transportation, compressed natural
gas deliveries, and championing the Group’s foray into the emerging Nigeria power sector.
Prior to joining Oando in August 2001, Mr. Osunsanya was an Executive Director at Access Bank PLC from November 1998 to
March 2001, and an Assistant General Manager at Guaranty Trust Bank PLC from 1992 to 1998. From 1988 to 1992, Mr. Osunsanya
worked as a consultant with Arthur Anderson, Nigeria (now KPMG professional services) gaining experience in the banking, oil and
gas and manufacturing industries.
Mr. Osunsanya sits on the Board of several companies in the Oando Group including Gaslink, Central Horizon Gas Company Limited,
Oando Marketing PLC and Oando Ghana.
Mr. Osunsanya obtained a First Class Bachelor’s Degree in Economics from the University of Ife, Nigeria, in 1985 and a Master’s
degree in Economics from the University of Lagos, Nigeria, in 1987.
In 2014, Mr.Mobolaji Osunsanya will assume the role of President of the Nigerian Gas Association, a role he will occupy for two
years.