Nigeria: Government ends gas aggregation monopoly with new license

The Federal government has relinquished its exclusive control over gas aggregation, allowing private investors to become more involved in the midstream sector moving forward.

Previously, private sector players were primarily active in the upstream and downstream segments of the industry. However, the introduction of the Petroleum Industry Act (PIA) has opened up new opportunities in the midstream sector, broadening their scope of operations.

The Gas Aggregation Company Nigeria Limited (GACN), established by the Federal Government following the National Domestic Gas Supply and Pricing Regulations, had a strong grip on the sector.

Following the new move, the Nigeria Midstream Downstream Regulatory Authority has offered the first Wholesale Gas Supply License for 500 million standard cubic feet of gas per day to Ohuru Trading Limited, an indigenous company.

Chief Executive of Nigerian Midstream and Downstream Petroleum Regulatory Authority, Farouk Ahmed, disclosed that the development followed the government’s commitment to attracting foreign direct investments and other forms of capital inflow into the domestic economy as well as improving the living conditions of Nigerians.

The company, with its primary focus on supplying gas to power plants, might initially utilize the existing gas transportation infrastructure in the country for its project investments. Ahmed, when granting the license in Abuja, emphasized that this move aligns with Section 142 of the PIA, aiming to enhance gas utilization throughout the nation.

“The commercial licenses as provided for in the PIA in general and the Wholesale Gas Supply License 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” he said.

He stated that the Wholesale Gas Supply License was granted to the company following a thorough evaluation and compliance with all specified criteria. Additionally, he mentioned that the company has received a third-party gas supply license, enabling them to directly purchase natural gas from any lease or third party.

He added that the commercial licenses as provided for in the PIA in general and the Wholesale Gas Supply License, in particular, are significant in many respects as they underscore the focus on commercial activities in the oil and gas space.

“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 licenses introduced by the Act and domiciled with the authority,” he said.

The Chief Commercial Officer of Ohuru Trading Limited, Mariah Lucciano-Gabriel, expressed appreciation for this advancement, highlighting that the company’s main focus has been on supplying gas for power generation.

She mentioned that the company, while depending on the current infrastructure, has plans to expand its network in the future to enhance reliability.