Abstract
This research work is based on the economic analysis of Gas to Power in Nigeria. Gas is progressively substituting the time of crude which substituted Coal. Nigeria is positioned as the 9th country in Africa with 192tcf estimated gas reserve in the world and 1st in Africa. The power sector has been underdeveloped over the years. The current initiative by the Federal Government of Nigeria to reach a target of 20GW capacity of electricity by year 2020 has identified the choice of Gas-to-Power as a major key-driver in attaining such a goal. This research work considered the economic analysis of converting Gas-to-Power under the prevailing petroleum fiscal system, through a critical review of a number of literatures. Model assumptions were made based on an offshore field for the analysis of associated Gas sales and an average of 20,000kW of power generated every year for 20years. Government Net Present Value (NPV) was gotten to be $181.12 MM and contractor NPV $337.04 MM for sales of the Gas and $20.07B, $10.78B for the government and contractor NPV respectively for power generation, Internal rate of return (IRR) for the contractor was recovered as 15% and 19% for gas sales and power generation respectively and the Profitability Index (PI) was calculated to be 3.88 for Gas and 3.2 for Power at the end of 20 years field life. The effect of CAPEX, OPEX, product price, production rate and discount rate on NPV, IRR and PI at 15% discount rate was investigated to know the range of profitability of Gas-to-Power using @Risk software to perform risk and sensitivity analysis. Discount rate and Price were seen to have the most impact on the output variables. Generally, the results were favorable for converting Gas-to-Power. The economic model has proved that Gas to Power technology is profitable in Nigeria and can also lead to industry growth which will invariably lead to revenue generation, therefore bettering the Nigerian economy and increasing social and human development.
