The Programme Manager for the Nigeria Gas Flare Commercialisation Programme (NGFCP), Mr. Justice Derefaka, has disclosed that a market analysis carried on the NGFCP by the International Finance Corporation (IFC) of the World Bank showed that the programme would be profitable if implemented on certain premises.
Derefaka, stated this in a recent presentation he made at the third edition of the ‘lawyers in oil and gas conference,’ in Lagos.
He emphasised that based on the market studies of the IFC, it was discovered that a realistic pricing range for flare gas to market (FG2M) would incentivise off-takers to participate in the project.
He noted that apart from the cost-benefit analysis and net back pricing that was done in the process, the market survey also covered areas such as risk and sensitivity analysis, market sounding and challenges that could derail the project, with all showing that implementing the NGFCP would be beneficial to all parties.
“The primary focus of the market study is on the off-takers (market) inputs and the total value chain economics and each of its corresponding links to determine whether and under what conditions flare gas can be taken to market based on sound economic and market criteria,” Derefaka explained.
According to him, focus was equally on current market conditions and potential adverse changes in market conditions within the next five and 10 years.
He explained: “This is premised on the fact that the flare gas-to-market projects will mainly provide services and products to unaddressed markets (e.g. supply electric power where today communities have no electricity, fertilizers where there are none.), generate savings by substituting a higher-cost with a lower-cost energy source (e.g. providing lower-cost power, substituting diesel or HFO with CNG, LNG or pipeline gas.)”
Derefaka further stated that the main objectives of the market study were to, “Determine the feasibility, attractiveness and sustainability of flare gas to market projects which includes the transformation of flare gas to ‘end products’ and the delivery and sale of these ‘end products’ to the off-taker.”
Source: Independent
