Analysing Nigeria's new national gas policy

Nigeria's National Gas Policy, approved by Vice President Yemi Osinbajo, has garnered mixed reactions from industry stakeholders. Some view it as a wish list of the federal government, while others see it as a positive step towards attracting investments in the gas sector. Oyeyemi Oke, Partner at AO2 Law, shed light on the critical factors that can ensure the success of the policy. These factors include gas pricing, gas legislation, gas entry incentives, investor-friendly gas development agreements, compliance with such agreements, and policy reliability. Oke emphasized the importance of implementing direct action by the government to make these wishes a reality. One of the key points highlighted during the analysis was the issue of gas legislation. Oke suggested that amending the current legislation to separate gas costs from oil income would provide an advantage to existing players in the oil sector. The policy aims to address this disparity by consolidating gas costs with gas income, creating a level playing field for both existing players and new entrants. However, Oke pointed out that Nigeria currently lacks a gas-centric legislation, relying instead on contractual and policy documents like the gas policy. Implementing a robust gas legislation could clarify these ambiguities and streamline operations in the gas sector. The policy also addresses gas energy incentives, offering production allowances and lower tax rates for gas developers. However, there appears to be a gap in incentivizing midstream players and those involved in gas utilization, particularly in the power sector. Oke stressed the importance of catering to the needs of participants in the midstream and utilization segments to ensure a holistic approach to gas development in Nigeria. Despite the potential benefits outlined in the new gas policy, there are lingering concerns about its effectiveness and feasibility. Oke pointed out that without a comprehensive gas legislation, the policy may face challenges in implementation and clarity. The slow pace of legislative processes in Nigeria could further delay the realization of the policy's objectives, making it crucial for the government to expedite the enactment of relevant laws. Investor appetite in Nigeria's gas sector remains cautious, with uncertainty surrounding the policy's impacts on investments. Oke noted that while there is cautious optimism among investors, many are still trying to grasp the full implications of the policy. Issues such as the NLNG investment concerns have also contributed to a subdued investor sentiment in Nigeria's gas space. Moving forward, it will be essential for the government to address these concerns and create a conducive environment for investments in the gas sector. In conclusion, Nigeria's new gas policy represents a significant milestone in the country's efforts to attract investments and promote gas development. However, the success of the policy hinges on effective implementation, clarity in legislation, and investor confidence. By addressing the gaps highlighted by industry experts like Oyeyemi Oke, Nigeria can foster a thriving and sustainable gas sector that benefits both existing players and new entrants.