The Federal authority’s long-standing exclusive control over gas aggregation is coming to an end, as private investors prepare to take a more prominent role in the midstream sector.
Until now, private sector entities have primarily operated in both the upstream and downstream segments of the industry. However, the Petroleum Industry Act (PIA) has ushered in the midstream sector, unlocking new opportunities.
The Gas Aggregation Company Nigeria Limited (GACN), established by the Federal Government in 2010 in response to the National Domestic Gas Supply and Pricing Regulations, once held sway over the stream.
In the wake of this new development, the Nigeria Midstream Downstream Regulatory Authority has issued its first Wholesale Gas Supply License, amounting to 500 million standard cubic feet of gas per day, to Ohuru Trading Limited, an indigenous company.
Farouk Ahmed, who serves as the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, has disclosed that this advancement is a result of the government’s resolute efforts to draw foreign direct investments and other types of capital inflow into the national economy, with the primary goal of enhancing the well-being of Nigerians.
Given its core focus on providing gas to power generation facilities, the company might temporarily utilise the existing gas transportation infrastructure in the country as it invests in such projects.
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Addressing the audience in Abuja during the license issuance, Ahmed emphasised that this move, intended to boost gas utilisation nationwide, signifies the implementation of Section 142 of the PIA.
Ahmed explained: ‘The commercial licenses as provided for in the PIA in general and the Wholesale Gas Supply Licence in particular are significant in many respects as they underscore the focus and priority attention placed on commercial activities in the oil and gas space.’
According to his statement, the company’s request for the Wholesale Gas Supply License was given the green light following a thorough assessment and meeting all required criteria. He further elaborated that the firm is now receiving a third-party gas supply license, enabling direct procurement of natural gas from any lease or third party.
He highlighted that the commercial licenses, as defined within the broader scope of the PIA and, more specifically, the Wholesale Gas Supply License, carry considerable significance across different dimensions, underlining the priority placed on commercial activities within the oil and gas arena.
‘This will enable them to sell and deliver wholesale gas to wholesale customers and natural gas distributors at any location in Nigeria. We believe that this will encourage prospective applicants to turn in their requests for other commercial licences introduced by the Act and domiciled with the authority,’ he said.
The Chief Commercial Officer of Ohuru Trading Limited, Mariah Lucciano-Gabriel, hailed this development as she emphasised that the company’s main focus has been supplying gas for use in power generation.
She made it clear that, although the company presently leans on the existing infrastructure, there are intentions to build its own network down the line to enhance reliability.