ert820%6 Miltaney exposes flaws in Nigeria's dated gas master plan| WoodMac Blog Militancy exposes flaws in Nigeria’s dated gas master plan GALA SON (/3LOG/CATEGORY/GAIL-ANDERS The return of violent attacks on infrastructure in the Niger Delta has been a major talking point for oil supply analysts this year. For Nigeria, the loss of up to 750,000 b/d (/reports/upstream-oll-and-gas-nigerias- production-drops-by-more-than-750000-bd-38936667)during Q2 has compounded the pain of low oil prices and accelerated its financial downturn, Last month, the country entered recession for the first time in 20 years. Power generation has slumped because of militancy Nigeria recognises it needs to diversify its economy away from oil, but events in the delta this year highlight its vulnerability in another critical area: the power sector. Militants have not just attacked oil pipelines, but gas pipelines too. With 85% of power coming from gas-fired generation either located in or supplied from the deka, electricity supply - that vital ingredient for Nigeria's economic development - is almost completely at the mercy of \d-gas-impact-of the-militant-crisis-on-nigerias+ militants (/reports/upstream-oll and-power-sectors- 42106977). Total power output including hydro has slumped from a record daily average of 4.5 GW on 2 February, to 2.5 GW since April. This has been driven by the 60% slump in gas-fired generation shown below. For a country of over 180 million people growing at 2.7% a year, such statistics are hugely concerning, taps voodmar.comiogimiliancy-exposes-taws-ir-rigeras-datedgas-master-parv2ulm_source-lnkecinGutn_medium=social&ulm_cempaign=w. wmert820%6 Miltaney exposes flaws in Nigeria's dated gas master plan| WoodMac Domestic gas supply and gas-fired power generation (July 2015-June 2016) 4.600 40 1400 a5 N 4,200 ae 3.0 1.000 25 800 2 «6g z S S 2 2 60 1 & = 6 400 10 200 os a 0.0 2° e oe (8 ee wf os PPK F SCHL E S KK ¥ mmmGasto power mmmGasto industry smmEscravos GtL —Generation (’blog/wp-content/Juploads/2016/09/Chart_formatted-1.png) The gas master plan has not been realised Energy policy since the 1990s rightly focused on developing Nigeria's world-class 2° gas reserves of over 150 tf while ending the practice of gas flaring from oil fields, The gas master plan of 2008 was a blueprint for new onshore processing and pipeline infrastructure across the delta and beyond, to feed a power sector expected to flourish with private sector capital Its fair to say that vision has not materialised, although some progress has been made with new pipelines and seven new government-funded power stations. But the addition of 1.9 GW of available capacity - well short of the 488 GWW planned — is a poor return Risks of piped-gas to power are exposed But capacity does not equal commodity, and militancy has exoosed the major risks in relying on piped-gas to supply large power plants. Indeed, 60% of Nigeria's gas-fired capacity relies on one line between Escravos and Lagos, which transits an area where the bulk of attacks have occurred ipsshwenw wondmac.comlogiiliiancy-exposes-aws-ir-rigeras-daled gas-master-plarY?utm_scurce-linkedindulm_modium=socil&ulm_campaign-w...2ittert820%6 Miltaney exposes flaws in Nigeria's dated gas master plan| WoodMac Not only that, pipeline costs in the onshore delta are astronomical - just ask Total, which spent US$1 billion on a 50-kilometre line to supply gas to power — while a large 500 MW power station could set an investor back at least US$1 billion. How comfortable are investors with these risks (/reports/energy-markets-supply-risks-undermine-nigerias-gas-to- power-crusade-22107934), when added to concerns about price regulation, security of payment and the lack of power transmission lines to name just a few? Nigeria needs a more diverse energy policy that will make a difference Nigeria would benefit from a more realistic and flexible energy policy /reports/power-markets-nigerias-failing- power-sector-how-buhari-can-improve-t-33302889) with less emphasis on hard-to-deliver, centrally planned mega-projects, and more emphasis on smaller, low cost, low risk, local solutions that are beyond the reach of militants. This doesn't mean giving up on gas, but being less dependent on it, and certainly being less dependent on onshore piped gas. This means a greater role for compressed natural gas and mini-LNG projects supplying small generation embedded into distribution grids where more capacity is available, The minister for power Babatunde Fashola has a track record of achieving this in Lagos, and is best placed to replicate this nationwide, given a chance Off grid renewables have a vital role to play Diversification also means a much bigger role for off-grid renewables, particularly since Nigeria has huge potential for solar. Ongoing solar investments in the far-north state of jigawa stand a far better chance of powering rural Nigeria than waiting a lifetime for the power transmission grid to catch up So, despite Nigeria's enormous power scarcity, the country may prosper more through projects that will definitely make a difference no matter how small, than grand designs which may be hampered indefinitely or never happen atall Gail Anderson Gail is a Research Director at Wood Mackenzie and has covered Nigeria's oil, gas (/olog/wp-content/uploads/2016/09/Gail-Anderson.png)and power sectors since 2010. Since joining in 2004, Gail has covered the upstream sectors in the UK, Europe and Russia and has contributed to our European gas and power research, as well as gas multi-client studies and various consulting projects. Gall started her career in 1999 at IPA Energy Consulting specialising in power sector restructuring in transition economies of Sub-Saharan Aftica and the FSU. Gail holds BSc and MSc degrees from the University of Aberdeen, Fipsshwerw woadmac.comlogiiliiancy-exposes-aws-ir-rigoras-daled gas-master-plarY?ubm_scurce-lnkedindulm_modium=socil&ulm_campaign-w... ittert820%6 Miltaney exposes flaws in Nigeria's dated gas master plan| WoodMac SHARE-THIS-ARTICLE: O 4 likes £ (http://www facebook.com/sharer.php?u=/blog/militancy-exposes-flaws-in-nigerias- dated-gas-master-plan/) (https://twitter.com/share?url=/blog/militancy-exposes-flaws-in-nigerias-dated-gas- master-plan/) & (https://plus.google.com/share?url=/blog/militancy-exposes-flaws-in-nigerias-dated- gas-master-plan/) @ (http://pinterest.com/pin/create/button/?url=/blog/militancy-exposes-flaws-in- nigerias-dated-gas-master-plan/&media=&description=Militancy exposes flaws in Nigeria's dated gas master plan) & (mailto:2subject=Militancy exposes flaws in Nigeria's dated gas master plan&body=The return of violent attacks on infrastructure in the Niger Delta has been a major talking point for oil supply analysts this year. For Nigeria, the loss of up to 750,000 b/d during Q2 has cormpounded the pain of low oil prices and accelerated its financial downturn. Last month, the country entered recession for the first time in 20 years. Power generation has slurnped because of militancy Nigeria recognises it needs to diversify its economy away from oil, but events in the delta this year highlight its vulnerability in another critical area: the power sector, Militants have not just attacked oil pipelines, but gas pipelines too. With 85% of power coming from gas-fired generation either located in or supplied from the delta, electricity supply - that vital ingredient for Nigeria's economic development - is almost completely at the mercy of militants. Total power output including hydro has slumped from a record daily average of 4.5 GW on 2 February, to 2.5 GW since April. This has been driven by the 60% slump in gas- fired generation shown below. For a country of over 180 million people growing at 2.7% a year, such statistics are hugely concerning. The gas master plan has not been realised Energy policy since the 1990s rightly focused on developing Nigeria's world-class 2P gas ipsshwenw woadmac.comogiiliiancy-exposes-aws-ir-rigoras-daled gas-master-plarY?ubm_scurce-lnkedindulm_modium=socil&ulm_campaign-w.. lttert820%6 Miltaney exposes flaws in Nigeria's dated gas master plan| WoodMac reserves of over 150 tcf while ending the practice of gas flaring from oil fields. The gas master plan of 2008 was a blueprint for new onshore processing and pipeline infrastructure across the delta and beyond, to feed a power sector expected to flourish with private sector capital. It's fair to say that vision has not materialised, although some progress has been made with new pipelines and seven new government-funded power stations, But the addition of 1.9 GW of available capacity - well short of the 4.8 GW planned — is a poor return. Risks of piped-gas to power are exposed But capacity does not equal commodity, and militancy has exposed the major risks in relying on piped-gas to supply large power plants. Indeed, 60% of Nigeria's gas-fired capacity relies on one line between Escravos and Lagos, which transits an area where the bulk of attacks have occurred. Not only that, pipeline costs in the onshore delta are astronomical - just ask Total, which spent US$1 billion on a 50-kilometre line to supply gas to power - while a large 500 MW power station could set an investor back at least US#1 billion. How comfortable are investors with these risks, when added to concerns about price regulation, security of payment and the lack of power transmission lines to name just a few? Nigeria needs a more diverse energy policy that will make a difference Nigeria would benefit from a more realistic and flexible energy policy with less emphasis on hard-to- deliver, centrally planned mega-projects, and more emphasis on smaller, low cost, low risk, local solutions that are beyond the reach of militants. This doesn't mean giving up on gas, but being less dependent on it, and certainly being less dependent on onshore piped gas, This means a greater role for compressed natural gas and mini-LNG projects supplying small generation embedded into distribution grids wnere more capacity is available. The minister for power Babatunde Fashola has a track record of achieving this in Lagos, and is best placed to replicate this nationwide, given a chance. Off-grid renewables have a vital role to play Diversification also rneans a much bigger role for off-grid renewables, particularly since Nigeria has huge potential for solar. Ongoing solar investments in the far-north state of Jigawa stand a far better chance of powering rural Nigeria than waiting a lifetime for the power transmission grid to catch up. So, despite Nigeria's enormous power scarcity, the country may prosper more through projects that will definitely make a difference no matter how small, than grand designs which may be hampered indefinitely or never happen at all, Gail Anderson Gail s a Research Director at Wood Mackenzie and has covered Nigeria's oil, gas and power sectors since 2010. Since ipsshwerw woadmac.comblogiiliiacy-exposes-aws-ir-rigeras-daled.gas-mastr-parY?ubm_scurce-linkedingutm_medium=social&ulm_campaign=w. sitert820%6 Miltaney exposes flaws in Nigeria's dated gas master plan| WoodMac joining in 2004, Gail has covered the upstream sectors in the UK, Europe and Russia and has contributed to our European gas and power research, as well as gas multi- client studies and various consulting projects, Gail started her career in 1999 at IPA Energy Consulting specialising in power sector restructuring in transition economies of Sub-Saharan Africa and the FSU. 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