COST – BENEFIT ANALYSIS FOR NIGERIAN NATURAL GAS PIPELINE INVESTMENT

  • Gift Nwabueze Emerald Energy Institute, University of Port-Harcourt, Nigeria
  • Joel Ogbonna World bank Center of Excellence for Oilfield Chemicals Research, University of Port-Harcourt, Nigeria
  • Chijioke Nwaozuzu Emerald Energy Institute, University of Port-Harcourt, Nigeria
Keywords: Gas Pipeline, Cost-Benefit Analysis, Investment, Net Present Value, Payback, Nigeria.

Abstract

This paper performs cost-benefit analysis of a pipeline infrastructure project based on a given natural gas demand in order to estimate the net present value and payback time for natural gas pipeline investment in Nigeria. The result of the cost-benefit analysis indicates a positive net revenue and net present value (NPV) at the current regulated transport cost and availability factor for gas pipelines in Nigeria. However, with a payback period of 14 years, a natural gas pipeline project in Nigeria is likely to lose-out investment capital to other competing investments within the oil and gas sector. Scenario analysis indicates that by doubling the regulated transport cost with a 50% tax reduction, the pipeline investment results in a much higher NPV and a payback of 4 years, which is more acceptable to investors.

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Published
2020-09-25
How to Cite
Nwabueze, G., Ogbonna, J., & Nwaozuzu, C. (2020). COST – BENEFIT ANALYSIS FOR NIGERIAN NATURAL GAS PIPELINE INVESTMENT. International Journal of Engineering Technologies and Management Research, 7(9), 52-65. https://doi.org/10.29121/ijetmr.v7.i9.2020.780