Following the announcement of the Nigeria Gas Transportation Network Code (NGTNC) on 10 February 2020, all users of the gas network are now expected to have migrated to and adopted the provisions of the NGTNC. The NGTNC became effective on 10 February 2020, but its provisions granted existing users of the gas network a six-month window to migrate from existing Gas Transportation Agreements to the network code. That window has now closed and the NGTNC is now fully operational.
It is hoped that the NGTNC will be a critical step forward in turning Nigeria gas into a major force in the Nigerian economy.
Nigeria has aptly been described as ‘a gas province with a little oil’, yet for too long, Nigeria’s gas resources have been neglected in favour of crude oil. Oil has dominated Nigeria’s economic outlook despite the fact that Nigeria’s gas reserves are speculated to be triple the amount of its oil reserves.
The NGTNC is in line with the Nigerian Gas Master Plan (NGMP), the National Domestic Gas Supply Pricing Regulation, 2008 and the National Gas Policy 2017, which stipulate that access to all midstream facilities will be on open access basis and a network code to manage access to the Gas network will be developed.
The NGTNC is designed to govern the operations between the network operator(s) and users of the gas transportation system (including all existing and future gas pipelines) in Nigeria. It will serve as an important negotiation component for gas business and transactions in the Nigerian domestic gas market. Some key objectives of the Network Code are to ensure fair and non-discriminatory access to the gas transportation infrastructure; promote gas trading; and deepen domestic gas penetration in-country.
Speaking on the significance of the NGTNC, the Minister of State for Petroleum resources, Mr. Timipre Sylva, said it would help to grow gas infrastructure, expand gas utilisation, curb gas flaring, and provide codes to standardise the gas value chain in line with global best practices.
Some stakeholders have remarked that the NGTNC is a fine policy that is long overdue. A lack of transparency in the industry has often (in the past) led to unfair and often discriminatory access to gas transportation network and has deterred investments. However, there are concerns that the NGTNC alone cannot solve the country’s lingering gas policy problems, especially as Nigeria still lacks a comprehensive legal and fiscal regime for developing its natural gas.
The NGTNC is a welcome development and it is hoped its implementation will boost market confidence and foster investment that will lead to the desired growth and productivity of the gas sector. We will continue to monitor the progress of the NGTNC and bring you updates as further information becomes available.
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