Consortium of 3 firms sign $25m Gas Infrastructure Development Deal

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CEM REPORT | Gas is gradually receiving attention from government and private organizations as the Petroleum Industry Act begins to unveil that needed conducive environment for the Petroleum Industry to perform as desired.

Indeed the economy may be running on gas in the coming years as said by the Minister of State for Petroleum, Timipre Silva early in May. He said gas will solve the problem of power generation and also will bring in the needed revenue to the government.

Guardian reported Tuesday that a consortium of Falcon Corporation, ND Western Midstream Limited and First Hydrocarbon Nigeria (FHN) Gas Limited, have signed a gas infrastructure development agreement worth over $25 million in the Lagos Free Zone (LFZ).

This investment is for the construction phase and would be funded through equity, according to the Chief Financial Officer, FHN, Kayode Olatunbosun. He stated this during the agreement signing ceremony for the gas development infrastructure.

The consortium has been selected to build exclusively, own, and operate a natural gas distribution infrastructure network within the LFZ and would incorporate a Special Purpose Vehicle (SPV): Optimera Energy LFZ Enterprise (Optimera Energy) within the Lagos Free Zone (LFZ).

Earlier, the Managing Director and Chief Executive Officer, LFZ, Dinesh Rathi, said the Consortium, through their SPV, would deliver uninterrupted piped gas by early 2024 to all the enterprises within the Lagos Free Zone.

“We welcome the consortium on this collective journey towards unlocking Nigeria’s true potential,” he stressed.He added that in its continued efforts at Lagos Free Zone to provide a world-class industrial ecosystem that enhances the competitive positioning of Nigeria as a manufacturing hub, its partnership with the consortium of Falcon Corporation, ND Western Midstream Limited and FHN Gas Limited, is a landmark development.

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He noted that with the Lekki Port’s construction slated to be completed in December 2022, there was a need to secure a reliable arrangement to meet the energy needs of its fast-growing tenant base, expressing confidence that its partnership with the Consortium would help LFZ realise the same.

“This is a unique transaction in the history of Nigeria’s downstream sector wherein a consortium formed of reputable upstream, midstream, and downstream companies have come together to ensure gas supply to LFZ, the sunrise economic epicentre of West Africa. “

Following existing laws and Acts in the petroleum industry, Natural gas pipeline and storage infrastructure can be owned by public and private parties as the relevant legislation providing for the construction, operation and maintenance of gas pipelines. No restriction is placed on ownership. All that is required is that an applicant obtain an oil pipeline licence from the Minister of Petroleum Resources.

The main natural gas pipeline transportation infrastructure in Nigeria – the Alakiri–Obigbo–Ikot Abasi Pipeline (the Eastern Network), the Escravos–Lagos Pipeline System (the Western Network) and the proposed Ajaokuta–Kaduna–Kano gas pipeline connecting the North – are all owned by the Nigerian Gas Processing and Transportation Company (NGPTC), a subsidiary of the Nigerian National Petroleum Corporation.

Private sector coming into gas infrastructure on either large of mini scale adds to the efficiency of the sector.

At the signing of the agreement, Managing Director, Optimera Energy, Mrs. Audrey Joe Ezigbo, said, “The Optimera consortium is made up of like-minded shareholders passionate about a common goal: accelerating the further growth of domestic gas utilization in Nigeria. Having reliable dedicated gas supply infrastructure installed in the LFZ adds tremendous value to existing industrial concerns and will increase the Zone‘s attractiveness to future customers.”

Ezigbo noted that the endeavour would be a big step towards actualising the objectives of the ‘Decade of Gas‘ initiative, of which gas based industrial growth is a significant part.

“The Petroleum Industry Act (PIA) provides the necessary regulatory environment for projects such as these to succeed in Nigeria. We look forward to working collaboratively with the Nigerian Midstream & Downstream Regulatory Authority (NMDPRA) in this project’s development and operation phases,” she said.

She added: “The Consortium members bring over so many years of experience and expertise in operating across the Natural Gas value chain from upstream production in the Niger Delta to downstream distribution to industries in Lagos. Our dedicated Project Team will work diligently with a strict adherence to the highest standards of safety, operational excellence, and regulatory compliance to deliver this project on time and under budget, as we have done within our respective portfolios.”

International ventures in gas development is also receiving attention even now that Europe is seeing Africa as a possible replacement to Russia in terms of gas supply as continent is serious working on a plan to settle for other source of gas.

Italy, for instance, has signed a gas supply deal with Angola in the wake of Russian Invasion of Ukraine. The Nigerian-Morocco Gas pipeline is receiving serious interest from foreign investors as well.

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