HERE COMES THE SUN

Nigeria 2019 | GAS & POWER | VIP INTERVIEW

By helping local and international investors navigate the complexities of the sector, GasInvest helps clients of every stripe understand a new and dynamic space.

What is GasInvest's core business?

GasInvest is a bespoke natural gas consultancy firm that operates in concert with its sister company, GasHub, a gas distribution, aggregation, and infrastructure company. Both companies started operations in 2016. Across the globe, gas is increasingly taking center stage. Nigeria is set for an explosive growth in the sector, yet its structure is still in its infancy. In essence, as much as there are huge opportunities, investment risks can be high if the sector is not adequately navigated. GasInvest also provides insight into the Nigerian gas market for potential investors, both local and international. We help navigate the complexities of the sector, allowing our clients to understand this new and dynamic space. We target a wide variety of investors, including oil and gas producers looking to monetize gas reserves, downstream operators looking for gas, investors looking to invest in gas infrastructure, or governments looking for gas-based strategies for industrializing. We work closely with the power sector, too.

How exactly do you work with the indigenous producers and IOCs?

Specifically with producers, our focus has been on helping with strategies to monetize gas through credible market opportunities. We work with clients to co-create markets and advise around making such projects bankable for the purpose of monetizing the gas. Through our network, we have access to a variety of potential market outlets and leverage this access to structure outlets for bankability. The biggest challenge for producers is bankable markets, an area where GasInvest aims to focus. With state governments, we create platforms for industrialization. For example, we advise the Delta state government on gas industrialization. Delta state probably has the largest gas reserves in the country, but its sector is less industrialized. The government is looking for a gas-based energy strategy that can attract manufacturing investment into the state, so we are working with the government to develop an energy blueprint, while simultaneously helping them develop the Kwale Gas Industrial Park, which is intended to be a manufacturing center. The Kwale Industrial Park is also being developed as a leading manufacturing hub to target small to medium scale gas manufacturers, e.g. ceramics, glass, chemicals, and more. Designed to offer world-class levels of energy uptime, it should guarantee 24/7 energy at competitive rates.

How would you assess Nigeria's current gas production?

The market continues to evolve, though there is still long way to go. A decade ago, the domestic gas price was low, as low as USD0.1/mcf.This was a disincentive to supply growth. Part of the Gas Master Plan effort was to reform the commercials for the domestic market. Today, the domestic market gas price is almost on par with international rates, i.e. at export parity. Often, there is a misconception about export gas receiving higher prices, but this is not true; on the contrary, transfer prices to domestic market are on par or even higher than exporting LNG. The challenge with the domestic market is therefore not pricing, but more payment assurance. The payment track record of purchasers in the domestic market is also poor. Power plants are not paying, and payment guarantees are not working. Investors would rather get paid half price than be promised a full price that never materializes. The focus, therefore, has to be on improving the payment credibility of the market as opposed to price. With full deregulation, the market will naturally take care of the price.