HomeIndustry SectorsGenerationNigeria must raise domestic gas prices, says boss of Total pipeline

Nigeria must raise domestic gas prices, says boss of Total pipeline

French oil giant Total has hinted that it could help ease Nigeria’s gas shortage if the price of domestic gas is increased.

Total has built a US$900 million pipeline, which will supply gas to the 964 megawatt capacity Alaoji Power Station in Abia State.

Although the company has agreed a price of US$2.5 per million British Thermal Unit (BTU) as part of the contract, Elisabeth Proust, the new managing director of Total Upstream Companies in Nigeria, said that this price is not adequate to guarantee adequate returns on the investment.

Mrs Proust said: “We have invested in a very huge pipeline onshore – 50 kilometres of 24-inch pipeline, starting from OML 58 to go to Imo River and to Alaoji. Here, we are already in contract with the power plant at Alaoji. This is our first customer. We will be ready to deliver the gas by 2015. So, we are now in negotiation with other industries, not power plants, to provide them with gas. My plan is that in 2017, we should produce and supply the gas through the pipeline,”

Proust, however, said to ensure that such a project was economic, domestic gas price should be increased from its current level of US$2.5 to between US$5 and US$7 per million BUT. “To get the economy of such project, we need to have a good price. The improvement in gas price is good. But we can say that it cannot provide the economy of such pipeline project. I hope that we will achieve a better price so that we can have the economy of such investment.”

She said Total had taken the risk, adding that “when you take risk, you take the reward”. “The reward is to maintain a big affiliate in Nigeria and create employment opportunities,” she added.