This article talks about Nigerian Petroleum Agency that Announced New Gas Price for Strategic Sector and market-related prices tied to international benchmarks.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has announced the establishment of the 2024 Domestic Base Price (DBP) and applicable wholesale price of natural gas for the strategic sectors. Announcing the establishment of the 2024 DBP, the agency in a letter signed by its Chief Executive, Farouk Ahmed, set the gas-to-power (Power sector) base price to $2.42 per Million British Thermal Unit (MMBTU) and $2.92 MMBTU for the commercial sector.
Read: NNPCL On Track to Expand Gas Infrastructure, Bridge Energy Access Gap
Mr. Ahmed, in a letter titled ‘Announcement on Establishment of the Year 2024 Domestic Base Price (DBP) and Applicable Wholesale Price of Natural Gas for the Strategic Sectors’, said the Petroleum Industry Act (PIA) 2021 assented to by the President on 16 August 2021 and gazetted on 27 August 2021, provides a clear regulatory framework for the determination of a market-based pricing regime for the domestic gas market in Nigeria. “In line with Section 167, the third and fourth schedule of the PIA 2021, the Nigerian Midstream & Downstream Petroleum Regulatory Authority is mandated to determine the Domestic Base Price (DBP) and the marketable wholesale price of natural gas supplied to the strategic sectors,” he said.
Read: Chevron Says Strong Policy Initiative is Key to Sustain Oil and Gas Investment
He explained that the Domestic Base Price at the marketable gas delivery point under Section 167 (1) and other provisions of the PIA shall be determined based on regulations which incorporate such other matters. Mr Ahmed said the price of natural gas must be of a level to bring forward sufficient natural gas supplies for the domestic market on a voluntary basis by the upstream producers.
“The price shall not be higher than the average of similar natural gas prices in major emerging countries that are significant producers of natural gas, lowest cost of gas supply based on three-tier cost of supply framework and market-related prices tied to international benchmarks. “Accordingly, after due consultation with key stakeholders and taking into cognisance the provisions of the PIA, as well as the gazetted Gas Pricing and Domestic Demand Regulations, the NMDPRA hereby establishes the Year 2024 Domestic Base Price as USD 2.42 / MMBTU and wholesale prices of natural gas in the strategic sector,” he said. Commending investors in the domestic gas market sector, the agency assured of its commitment to deepening the domestic gas market. “We thank and appreciate all investors in the domestic gas market sector and assure you of the Authority’s commitment to continuously ensure transparency, deepening of the domestic gas market, and creating an investor-friendly business environment, as we dutifully implement all the provisions of applicable regulatory frameworks,” he added.