FG grants 25-year license to 10 gas distribution companies

• Published On: 29 January 2025 at 17:23

The Nigerian government, through the Nigerian Midstream and Downstream Petroleum Regulatory Authority, has granted ten companies 25-year gas distribution licenses for the construction and operation of gas networks.

These licenses, which aim to promote domestic gas use, cover franchise areas in Lagos, Ibadan, Port Harcourt, and Benin City.

The goal is to ensure that natural gas reaches homes and industries in Nigeria's southwestern and southern regions.

During the award ceremony on Tuesday in Abuja, NMDPRA CEO Ahmed Farouk announced that companies such as Nigerian National Petroleum Company Limited, Shell, Nipco, Central Horizon Gas Company, Falcon, and Axxela had been granted 25-year gas distribution licenses.

He also stated that the awarded areas are already connected to the Escravos-Lagos Pipeline System.

Out of 30 applications, 20 were screened, leaving the top ten to lead the first phase of Nigeria's gas expansion initiative.

In his keynote address, Ahmed stated that the licenses would allow for the distribution of over 1.5 billion cubic feet of gas per day via a 1,200-kilometer gas pipeline network and more than 500 customer stations.

"Ten licenses are being issued today as part of Phase 1 of the Gas Distribution Licensing regime to operators who have made significant investments in developing gas distribution infrastructures in the designated Gas Distribution Zones and have met the minimum requirements."

"The licenses issued today cover a cumulative gas distribution capacity of approximately 1.5 bscf/d, including over 1,200 km of gas distribution pipeline network and over 500 customer stations.

"This license regime provides a significant opportunity to support the growth of our domestic gas market by supplying gas to our energy and testing industries, industrial parks, special economic zones, embedded captive power generation, mobility CNG schemes, and any other downstream gas utilisation program.

"We appreciate that this license regime shall not only support the accelerated development of our domestic gas market, but that it shall create opportunities for profitable investment for various classes of stakeholders, improve the socio-economic impact of gas resources across Nigeria, and support our national energy processing sectors," Ahmed told the crowd.

NNPC and Shell will operate the Agrara, Ota, and Badagry Local Gas Distribution Zones, which have a capacity of 102 million standard cubic feet per day. The Greater Lagos Industrial Area (GLIAS Local Gas Distribution Zone), with a capacity of 130 MMSCF/D, will be run by NNPC and GasLink.

The Ikorodu Local Gas Distribution Zone, which is managed by NNPC and Falcon, has a capacity of 25 million cubic feet per day.

Meanwhile, the Kara Bridge-Ibafo-Sagamu Interchange Local Gas Distribution Zone, with a capacity of 150 MMSCF/D, will be managed by NNPC and Nipco.

The NNPC and Nipco will operate the Lekki Free Trade Zone Local Gas Distribution Zone, which will have a capacity of 25 MMSCF/d.

The Ogere-Ibadan-Oluyole-Olorisako-Asuire-Ajoda Local Gas Distribution Zone, which is managed by NNPC and Nipco, also has a capacity of 150 MMSCF/D.

CHGC operates the Port Harcourt Cluster 2 Local Gas Distribution Zone in the South-South region with a capacity of 50 MMSCF/D.

The Shell-managed Port Harcourt Cluster 1 Local Gas Distribution Zone will have a capacity of 30 million cubic feet per day.

The Port Harcourt Cluster 1 Local Gas Distribution Zone, managed by Shell, will have a capacity of 30 million cubic feet per day.

The Ada Local Gas Distribution Zone, which has a capacity of 30 MMSCF/D, will be managed by NNPC.

Finally, Nipco will operate the Benin Local Gas Distribution Zone, which has a capacity of 20 MMSCF/d.

Ahmed clarified that the gas distribution license program "is expected to lay a solid foundation for long-term growth and prosperity, unlock the full potential of our natural gas reserves, enable the development of new and tech markets, and create new sources of revenue and employment for our nation."

"These licenses are expected to stimulate investment. "Pipeline natural gas provides continuous supply, is cost-effective, safer, and eliminates storage challenges," he continued.