Nigeria’s debilitating energy shortages encumbering its development aspirations may soon be a thing of the past if a $10billion infrastructure investment by the Nigerian National Petroleum Corporation fully hits the right cord.
For most stakeholders, one interesting aspect of these investments on completion is their inert capacity to erase the burden of an estimated 120million Nigerians currently having no access to reliable power supply, thereby moving Nigeria off the list of world’s energy impoverished nations.
As a country, facing the realities of a new normal occasioned by the COVID-19 pandemic, economy experts have often argued that Nigeria cannot but commence an immediate economic diversification programme driven by gas industrialisation, to guarantee its survival and sustainability amid the shocks already thrown up by cyclical swings of the international oil market.
With the benefit of hindsight, even a rookie economist would easily admit that the over 60 percent crash in global crude oil prices which almost crippled the Nigerian economy in the wake of the pandemic last year was indeed a clarion call for a deeper diversification away from oil.
There is therefore no gainsaying it that the impact of that global oil shock that threw the nation’s economy into its second recession in five years in 2020, when low demand for crude dropped prices to below $10 per barrel.
This then forced all government and private sector businesses to take a hit as oil revenues tinned out and remained so for the better part of the year.
Today however, no one needs be reminded that the dance steps for the nation’s economic drumbeats must therefore change to reflect the new normal, with a flight to more gas utilisation locally and overseas, ahead of the real transition over the next four decades likely not be out of place.
First, Nigeria Africa’s largest and one of its fastest developing economies needs a lot cleaner fuels to power its development agenda in the face of huge energy gaps.
This also means that pushing for more gas investment at a critical time like now would position the country as a major economic bloc that is taking advantage of its resources to uplift its citizens.
Just as industry experts have argued that Nigeria has more gas deposits than crude oil, a move for gas industrialisation would have far linkage effects on power supply, industrialisation, infrastructure and job creation.
Furthermore , the multiplier effect of a national gas revolution would greatly impact the various sectors of the Nigerian economy to create jobs needed to pull millions of the citizens out of poverty in line with President Muhammadu Buhari’s pledge to his country men.
Perhaps the imperative of this thematic proposition may have influenced discussions of various subject -matter experts who recently spoke at the Atlantic Council Global Energy Forum 2021.
At that forum, both the Secretary General of the Organisation of Petroleum Exporting Countries (OPEC) Mr Mohammed Barkindo and the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) Mr Mele Kele Kyari, favoured the choice of more investments in the gas sub sector of the economy, without also neglecting the current opportunities in the black gold .
Kyari who spoke on the second day of the Atlantic Council Global Energy Forum, on the topic “Delivering Energy Access in the Developing World,” observed that although Nigeria aligns with the push for renewable energy, it is also focusing much of its energies on using its oil and gas resources to develop domestic infrastructures pending when fossil fuels become less relevant over the next four decades according to experts’ predictions.
According to him, Nigeria with significant gas reserves, has approximately $3 billion to $4 billion projects ongoing with many at advanced stages of completion, as it races to rev up production for domestic use and for export too.
In line with the opinions often expressed by energy experts Kyari said: “We are not a petroleum bearing country in the real sense. It is a known fact that we have the 10th largest reserve of oil and significant gas reserves. Of course, what everybody recognises is the oil. The reality today is that we have a country in excess of 200 million people with 70 per cent of that population well below 30 years, a growing middle class and one of the fastest-growing economies in Africa.”
But amidst these strong attributes, a key concern of the NNPC GMD centres more on how to curb its energy deficiencies to make power more readily available to an estimated 60 per cent of the country having no access to reliable power supply.
He further argued that this level of energy shortage has tagged the country as one with very high poverty level, unemployment and an extremely deficient infrastructure base. “But so much is going on to see how we can reverse this trend. When you combine all these, you will see that as a country that is focused on changing the trend of development today, a lot of things are happening in the energy sector to bring about more improvements and efficiency in its energy space.
“For instance, we are seeing huge investment in our energy infrastructure, especially in the area of gas in excess of $10 billion; this is ongoing. There are also a number of gas-based projects about $3 billion to $5 billion dollars and some of them are at the Final Investment Decision (FID) stage.” Kyari said.
Among the projects that have often bolstered the NNPC boss’s confidence that country was headed in the right direction with gas industrialisation include the Federal Government’s plan to deepen domestic gas consumption, which had culminated in the advent of Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG) with the objective to deploy resources in the right places. Other are the Oil and Gas Dispute Resolution Centre (DRC), Oil and Gas Competence Development Centre (CDC) and the Integrated Data Mining and Analytics Centre (IDMAC).
The above initiatives are in addition to such ongoing projects as the AKK pipeline project, the NLNG Train-7 project, and the 5,000 barrels per day Waltersmith Modular refinery in Imo State
There have also been renewed focus on gas and condensates for revenue generation, with the country’s plants now producing between 250,000 to 350,000 barrels of condensates daily, as projects to rev up gas production were in the offing.
Kyari stated that Nigeria as a country in transition and not necessarily in energy transition, was not oblivious of the changes in the global oil and gas industry.
In the gas sector for instance, he explained that Nigeria is now witnessing increased domestic gas demand for industrial and power sectors utilisation leading to increased production and reduced gas flaring.
He however added that the country is also witnessing increasing household access to gas networks and natural gas in cities, coupled with deliberate plans to expand access to rural areas.
He said, “The best of forecasts have said that in 30 years we will still have at least 100 million barrels per day of oil consumption.
“So, oil and gas will still remain relevant in the near future, but the transition is real. What countries and nations are doing is to move towards much cleaner fuel and this cleaner fuel is clearly gas and that’s why we as a company are focused on gas resources, and making sure we supply the domestic market while creating opportunities for export.
“So, what we see as an energy resource-based country is to utilise the available resources of today to create the enabling environment for growth and prosperity for the country and that clearly aligns with the reality on the ground.
“We have significant goodwill and understanding across countries, nations and companies.
For instance, we have significant engagement with the United States Department of Energy in the sense that we receive some support in our transition to cleaner fuels so that we can develop our gas infrastructure so that we move away from the liquids to gas ultimately.”
“What does this mean for a country like ours which depends on oil for cash? Obviously, we have seen how we can transit to something better for our country, so we don’t depend on that today. You may be aware that today, the country’s resources are mostly coming from taxes and those taxes are growing because population and prosperity is growing and we want to get more work done.
“As a country, we are facing the new realities and we are moving towards the use of gas and also we are developing our resources as quickly as possible so that when the real transition comes in 30 to 40 years time, we will be in a position to say this is a developed country that has taken advantage of its resources,” he stated.
“We have significant goodwill and understanding across countries, nations and companies. For instance , we have significant engagement with the United States department of energy in the sense that we receive some support in our transition to cleaner fuels, so that we can develop our gas infrastructure so that we move away from the liquids to gas ultimately,” Kyari noted.
On the question of the country’s preparedness for life after oil especially against the backdrop of the COVID -19 pandemic, the NNPC boss explained that Nigeria was indeed gradually moving away from dependency on oil.
“He said “ Nigeria is obviously transiting oil cash to taxes and we have seen how we can transit to something better for our country.
You may not be aware that today, the bulk of the country’s income is mostly coming from taxes and those taxes are growing because population and prosperity are growing which is why we want to get more work done.
For his part, Barkindo, also a former GMD of the NNPC while speaking on, “The Geopolitics of the Energy Transformation,” argued maintained that though renewable sources of energy will continue to develop, oil and gas will remain very relevant, accounting for over 50 per cent of global energy mix by 2045.
That was why he averred that with the world’s population growing by 1.7 billion over the next two and a half decades and the world economy more than doubling, oil and gas will remain relevant.
The OPEC scribe argued that while the oil cartel was not opposed to the growth of renewable energy, talks about oil and gas suddenly becoming useless was not founded on hard facts.
He said “Although, there are some who believe the oil and gas industry should not be part of energy future and should therefore be consigned to the past, with renewables and electric vehicles more in the front burner, it is important to state clearly that science does not tell us this.
“The statistics relating to the blight of energy poverty do not tell us this either. The science and statistics tell us that we need to reduce emissions and use energy more efficiently.
“Renewables are coming of age, with wind and solar expanding quickly, but—even by 2045 in our WOO—they are only estimated to make up just over 20 percent of the global energy mix, while Oil and gas combined are forecast to still supply over 50 percent of the world’s energy needs by 2045, with oil at around 27 percent and gas at 25 percent.
The OPEC helmsman concluded that the world will continue to need more energy in the decades ahead, in the near term as it recovers from the COVID-19 pandemic—and looking longer term to 2045, in preparation to rid itself of the scourge of energy poverty.
“ Looking at the scale of the challenge of the energy transition, we need to utilise all available energies, and it is crucial that we appreciate just what each energy source can provide in the decades ahead.
Barkindo reiterated that globally, the oil and gas market would require over $12 trillion investment between now and 2045, warning that there might be further energy shortfall without the needed investment.
“The future requires massive investments, with the WOO 2020 highlighting that the global oil sector alone requires a cumulative investment of $12.6 trillion through to 2045.
“It is vital that the required investments are made, in all energies, to ensure stable and continuous supplies, and to help reduce and, ultimately, eliminate emissions.
“Without the necessary investments, there is the potential for further volatility and a future energy shortfall, which is not in the interests of either producers or consumers,” he stated.
The Global Atlantic Council event also coincided with Nigeria’s continuing efforts to rev up its operations in the gas sector, with President Muhammadu Buhari, pledging to continue the federal government’s diversification drive through the efficient use of the revenues from oil and gas resources in the country.
The president further declared that Nigeria will continue to strengthen its position as a regional leader in the oil and gas industry, even as his administration will spare no effort in ensuring maximum benefit from the nation’s huge natural deposits.
The president explained that the integrated centre will enhance the contribution of the oil and gas sector to the nation’s GDP as well as strengthen Nigeria’s position as regional leader in the industry.