With the recent endorsement of Seplat by the Minister of State Petroleum Resources, Chief Timipre Sylva, as the flagship company to drive Nigeria’s energy transition, the stage is set towards achieving net-zero emission by 2050, reports EDDY OCHIGBO
Seplat Energy Plc., Nigeria’s foremost indigenous energy company has been given a pat on the back for its determination and readiness to champion the quest to improve Africa’s energy access, by refocusing its operations towards cleaner energy sources.
This is coming against the backdrop of a collective decision to ensure that Seplat is committed to carbon neutrality upon the realization that something must be done by everyone in respect of decarbonization.
Accordingly, the federal government is in full support of the company to achieve its energy transition plan – universal access to energy by 2030; zero carbon emission by 2050; and industrialization to alleviate poverty and drive economic growth in the country.
Vice President, Professor Yemi Osinbajo, at the second Seplat Energy Summit, held at the Transcorp Hilton, Abuja, recently, where the company transitioned from an oil and gas company to an energy company with renewables and cleaner energy as the priority, said the transition is laudable as the company has taken the right step; and Seplat, with others, will assist the the country to meet its net-zero emissions plans by 2050 through the COP26 Energy Transition Council process.
Represented at the Summit by the Minister of State for Environment, Sharon Ikeazor, Professor Osinbajo said Nigeria’s energy transition cannot be limited to incremental steps but transformational steps, maintaining that “Nigeria needs a broader set of policies that must align with energy security, which must foster a smooth energy transition across various levels of energy demands, and gas will continue to play a critical role in Nigeria’s energy transition which will create lots of opportunities in the country’s energy value chain. Over the next decade, every energy segment in Nigeria will be affected by this shift in energy supply and demands”.
Minister of State Petroleum Resources, Chief Timipre Sylva, while speaking at the debut of Seplat Energy Summit last year, said the challenges that the Covid-19 pandemic posed to the global oil and gas industry and in particular, the impact on our Nigerian operations, notwithstanding, strategies for sustaining business resilience and sustainability to enable Nigeria navigate the global crisis are in place, including measures for the curtailment of oil production in response to OPEC+ initiative to rebalance and stabilise the global markets.
“This distinguished audience will recall that the aim of the production cut was achieved as oil prices rebounded from its 2020 lowest point of $10/bbl (as at 21st April 2020) to $43/bbl (as at 23rd July 2020). This was just a week before the Seplat Energy Summit which held on 30th July 2020, and oil price has continued on the upward trend to the current $80/bbl (as at 6th October 2021).
“Apart from the fact that the world was grappling with a pandemic, in Nigeria, we were also waging a battle of wits to pass the Petroleum Industry Bill (PIB). We were tenacious in the pursuit of that objective because we recognised that the PIB, when passed into law, would inaugurate a new era for the industry, following decades of legislative attempts to strengthen the legal, regulatory, fiscal and governance framework of the petroleum sector”, Sylva stated.
He went on: “On 16th August 2021, this aspiration crystallised when Mr. President signed the PIB into law. The new law has enhanced the Nigerian petroleum industry’s reputation, provides the pathway to new investments, and consolidates our ability to play a significant role in meeting the world’s growing demand for energy. Even more significant is the fact that the passage of this legislation is coming at a time that the global energy investment outlook is becoming clouded by concerted effort aimed at expediting and enthroning a lower-carbon future”.
The PIA 2021, he revealed, would undoubtedly assist in harnessing Nigeria’s potential to achieve its plan of increasing oil production to 4mb/d and oil reserves from 37bbls to 40bbls, while also drawing on the country’s estimated 600TCF of natural gas reserves to provide clean and efficient energy. These resources would be crucial in supplying world markets with a broad portfolio of energy options, as well as supporting the global endeavour to alleviate energy poverty as envisioned in the United Nations’ Sustainable Development Goal 7. He said the ministry’s approach to the issue of renewable energy and the energy transition is proactive.
The minister explained that the concept of a single pathway to the energy transition, is unacceptable in the country, adding that “the concept of ‘just’ energy transition, which takes into cognizance the specific circumstances of each nation in developing the energy transition pathway that best achieves the environmental, social, political and economic objectives of the transition in that specific nation. Multiple pathways to the energy transition should and must exist in order to ensure that no country is left behind in the process of achieving net-zero by 2050.
“Furthermore, generous incentives have been proposed in the PIA 2021 to enable development, distribution, penetration and utilisation of gas. The National Gas Expansion Programme was also launched in January 2020 to drive domestic utilisation. Our proven gas reserves are sufficient to cover current demand levels and support plans for the construction of nine new gas-fired power plants with a combined name-plate capacity of nearly 6,000 MW by 2037. This validates gas a viable and transformational fuel for industrial development”, he emphasized.
President Muhammadu Buhari who is also the Minister of Petroleum Resources has declared 2021 – 2030 as the “Decade of Gas”, which provides the fulcrum for focusing effort and resources required at making gas the cetrepiece of Nigeria’s economy by 2030. The PIA 2021 also preserves existing levels of government for a transition period through strong provisions, and proposes a fiscal regime that encourages investment in order to monetise existing reserves before the clock runs out. Thus, provisions relating to voluntary conversion, production allowances, lower royalties and taxes, cost optimization focus, etc. have been enshrined therein to address the envisaged fiscal vulnerabilities.
The deregulation of downstream petroleum sector is yet another strategy proposed to enable energy transition in Nigeria. The government is in the process of fully deregulating the downstream petroleum sector which will end subsidies and free up funds for national development, including investment in renewables which will be part of the energy mix that ultimately powers our economy.
The PIA 2021 also has a general focus on Midstream and Downstream as this is where value will be created via a multiplier effect on the economy, infrastructure, employment and revenues. The newly created Midstream and Downstream Petroleum Regulatory Authority is mandated to ensure that this value and other benefits actually accrue to the economy. There is also a focus on diversification of the economy by enshrining incentives that target significant growth in power generation and the creation of a wide range of industrial clusters around fertilizer, petrochemicals, manufacturing and agro-businesses among others.
On his part, Seplat Energy Chairman, Mr Ambrose Orjiako, reiterated that to achieve the cleaner energy provision goal, they plan, with associates, to replace all the wood people use in homes with the use of Liquified Petroleum Gas, LPG, which is cleaner energy. “The transitioning to an energy company aligns with global trends in energy transition where fossil fuels will start to decline in the global energy mix and aligns the company’s renewed focus on the entire energy value chain with an emphasis on cleaner and more sustainable forms of energy to power Nigeria,” he said.
Orjiako disclosed that the company believes that gas is the transition fuel, and “Seplat today delivers 50 percent of gas needs in the country. We are very aligned with the federal government’s initiative in this regard and we can only see this increasing. Replacing diesel generators with cleaner renewable energy will solve Nigeria’s power deficit”.
“Distinguished participants, while preparing for the energy transition, we are committed to the development and monetization of our oil resources as well. Indeed, the recent World Oil Outlook released by OPEC forecasts that oil would still be in high demand by at least 2045. This is why every effort must be made to urgently develop our oil resources optimally, and, importantly, to source for alternative sources of investments in the light of the stance of not funding the development of fossil fuels by certain players in the global financial ecosystem,” he summed up.