NMDPRA Issue New Domestic Base Price Of Natural Gas

By Stephanie Odiase

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has released the Domestic Base Price (DBP) and applicable wholesale price of natural gas for the strategic sectors.

Authority Chief Executive, Engr. Farouk Ahmed, who signed off the letter transmitting the DBP of $2.42 per Million British Thermal Unit (MMBTU), said the base price and applicable wholesale natural gas price for the strategic sector is in line with the provisions of the Petroleum Industry Act (PIA) 2021 assented to by the President on the 16th of August 2021 and gazetted on the 27th of August 2021. The law provides a clear regulatory framework for the determination of a market-based pricing regime for the domestic gas market in Nigeria.

The agency pointed out that “In line with Section 167, the Third and Fourth Schedule of the PIA 2021, the Nigerian Midstream & Downstream Petroleum Regulatory Authority (NMDPRA) is mandated to determine the Domestic Base Price (DBP) and the market wholesale price of natural gas supplied to the strategic sectors.”

The Authority explained that the domestic base price at the marketable gas delivery point under Section 167 (1) and other provisions of PIA shall always be determined based on extant regulations and the clear provisions of the applicable laws.

As prescribed in the PIA, ACE emphasized that going forward, 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.

Other principles that guided the determination of the DBP as explained by the ACE to include the requirement saying, “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 shall be based on the three-tier cost of supply framework; Market-related prices tied to international benchmarks.”

The Authority further maintained that the new domestic base price was arrived at 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.


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