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Stakeholders Brainstorm about Future Fuels and Energy Transition in Africa

At the just concluded Nigerian International Energy Summit, the Group Managing Director/Chief Executive Officer (GMD/CEO) of Nigerian National Petroleum Company (NNPC) Limited, Mallam Mele Kyari, announced that NNPC is vigorously strategising to end gas flaring in Nigeria and further advance the country’s net-zero emission targets and cleaner energy ambitions. His views were re-echoed many times by many more industry leaders in the course of the week-long summit, which was themed “Revitalizing the Industry: Future Fuels and Energy Transition,” and where a common position was taken on the need for Africa to harness cleaner energy for economic development. VALUECHAIN’s Yange Ikyaa and Eddy Ochigbo write on the Summit.

Some experts in the field of medicine have claimed that individuals living in gas flaring host communities are prone to various life threatening  health hazards, as gases emitted from the process are confirmed to have adverse effects on both the environment and on human health.

Speaking at the CEO Roundtable session during the 5th Nigeria International Energy Summit, which took place last month in Abuja, with the sub-theme: “Strategies for Confronting the Energy Transition Challenge,” the Group Managing Director/Chief Executive Officer (GMD/CEO) of Nigerian National Petroleum Company (NNPC) Limited, Mallam Mele Kyari said that a key strategy for tackling the energy transition challenge was to beef up investment in the development of physical infrastructure. This, he said, would get electricity to end users across every part of the country.

His words: “It is true that we have energy poverty in the whole of Sub-Saharan Africa, and we have at least up to 15 years of getting away from that, with the best of intentions. There are a number of estimates which show that to bridge the infrastructure gap in Sub-Saharan Africa, I have seen numbers around $33 trillion as what is required to fill the infrastructure gap in the next 20 years and it is very difficult to get that money on the table.

“Which means that if we cannot put $33 trillion on the table in the next 20 years, we cannot close the infrastructure gap in the next 20 years, including in energy. We talk about electric vehicles (EVs), but even the roads that the EVs will run on are not there enough. Then, on electricity, what we do in the country is probably around 5,000 megawatts.

“We know that in this country, anything less than 30,000 to 40,000 megawatts cannot keep this country, even for today’s needs. And, of course, the population is growing, the middle class is growing fast, their requirement of energy is very much deepening, and rural-urban migration is at its peak, so it means that we need more and more infrastructure on ground to be able to close that gap.”

The NNPC helmsman also argued that it is not every country that has the natural resources that Nigeria has; and that, most countries do have some of the natural resources but not every country has the kind of resources that Nigeria has and you can’t easily say that there are sufficient natural resources that can be put on the table to close this infrastructure gap in Africa.

“I don’t want to be a prophet of doom but the reality that we see today, I can’t see the amount of resources around that can close this infrastructure gap, and that is in the next twenty years to come. So, we need to be much more productive; industrial growth must be accelerated, infrastructure must be put in place in the short term so that the economic growth comes to a level where it can provide a sizeable amount of that $33 trillion that we require.

“In this country, it is not difficult but we can do nothing without having electricity on the ground, so we must answer the electricity question in this country so that industries can thrive, businesses can grow.”

Kyari went ahead to explain that three months ago, in Sokoto State, people were looking for charcoal to buy and they couldn’t find it, and that if they can’t find LPG and can’t find charcoal, even when they have food, they can’t cook it anymore.

“And this is the extent of the energy poverty that we are facing today and, therefore, our first priority must be to resolve the power question, and not just producing power but getting it to the end users,” he said, while also explaining that “this is not something that will happen tomorrow; it is a project that is going to be delivered in two years or a maximum of three years. But as you all know, we have power plants that can’t run all their turbines because when you do, there is no evacuation for the power that is produced.

“So, in a nutshell, we must answer the power question, and when we answer the power question today in the short term, then, in 2050 or 2060, I’m not sure I will be there, but that would have provided the opportunity for economic growth that we can say that this country has prosperity, the poverty level is brought down to probably 10 per cent or 5 per cent of the total population, and then you will have all the infrastructure in place, so that people are able to have accommodation, people are able to live in their homes, and people are also able to drive their EVs, maybe in 2060.”

NNPC’s renewed move to bring gas flaring in the country to an end is indeed a welcome development. Kyari had revealed during a panel session that part of the strategies to achieve success would be to ensure that any proposed project without clear-cut plans to commercialize or use up its associated gas would no longer be approved.

The NNPC boss remarked that gas utilization was a major priority of both the federal government and NNPC, as efforts were on to build infrastructure to replace the current use of petrol and diesel in the nation’s factories with gas, which is a cleaner source of energy. He also pointed out that the trend was in tandem with the global reality of energy transition, while further stressing that Nigeria as a country needed all the hydrocarbon of today to build the energy of tomorrow.

In his keynote address, the Minister of State for Petroleum Resources, Chief Timipre Sylva, said the Ministry of Petroleum Resources was ready to provide the needed framework and support for seamless energy transition in the country.

Sylva, who later signed an agreement with the Minister of Industry, Mines and Energy of the Equatorial Guinea, Gabriel Mbaga Obiang Lima, in order to boost further commercialization of the nation’s unused gas resources, said “Nigeria has huge gas resources, a significant amount of which is offshore and will require unprecedented investment in infrastructure to bring them to market.

“This collaboration allows much of that stranded gas to access the global gas market within 18 to 24 months in what will be the fastest timeline to market a Nigerian offshore gas asset.”

Also speaking, Gabriel Obiang Lima said it was essential to “think differently” on how to be an important player in the energy market. According to him, “new, fast, and competitive sources will be a major determinant of success. This strategic collaboration breaks down geographical boundaries and allows delivery of gas from Nigeria to Equatorial Guinea’s Punta Europa facilities, extending their life and providing access to the regional and global energy markets.”

Similarly, former Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, said focusing on fast-tracking oil production, in-country refining, developing funding stream and leveraging the Petroleum Industry Act (PIA) were some of the solutions to the industry’s current challenges. Kachikwu advised that gas should be seen as a transition fuel with an estimated life span of 20 years, adding that industry players in the country should begin to look at alternative sources of energy such as solar and wind to catch up with the world before 2060.

Other panelists, including the Chief Executive Officers of Chevron, Exxon-Mobil, Shell Nigeria Group of Companies, as well as the Deputy Managing Director of Total Energies and the leadership of NLNG expressed commitment to the energy transition aspiration of the Federal Government, while indicating their willingness to partner NNPC for better business opportunities.

According to the Managing Director/Chief Executive Officer of Nigerian Liquefied Natural Gas (NLNG), Dr. Philip Mshelbila, “we are a globally competitive company, helping to build a better Nigeria and we have been in transition for long if you want to talk about decarbonisation. With our incorporation and operation, we were able to reduce gas flaring from more than 65 per cent to currently less than 20 per cent in Nigeria.”

When NLNG got into the cooking gas business and started advocating that practice in 2007, the company started with about 50 thousand tonnes into the Nigerian market, while also simultaneously exporting. Progressively, that number has been taken up to the extent that last year, the company hit 400 thousand tonnes that it produced and supplied to the domestic market after its board gave the mandate to increase production volume to 500 thousand tonnes.

This is a big deal because cooking gas reduces deforestation and carbon emissions, as a number of families who want to put food on the table are having to use charcoal or firewood and that is contributing to carbon emissions.

In the words of Dr. Mshelbila, who was represented by the company’s General Manager Operations, Laide Falade “so when we wanted to go back to our vision as a company that is helping to build a better Nigeria, we didn’t see anywhere that this could find expression than just helping to create a cleaner fuel and saving lives because statistics and history tell us that 100 thousand people die every year in Nigeria due to smoke inhalation.”

Last year, NLNG signed three SPAs to bring 1.1 million metric tonnes per annum of LNG into Nigeria. The process is on and within this year, all things going well, it will start having LNG coming in to increase the consumption of domestic gas and of LNG in Nigeria.

The company says it is doing all this because it recognizes that such activities will reduce emission and help accelerate the energy transition process. At the micro level, even in the plant itself, there are aggressive targets, as the company has a green-gas energy management plan that spells out critical milestones and is reported all through to the board where these practices are measured.

“We have our flaring target that we have been monitoring over the years on a continuous basis that we continue to reduce and which is benchmarked against others and we are doing well below what the global level is.

“Today, our target is 0.5 per cent of the weight intake in terms of what we stay to and we continue to apply technologies to help us reduce emissions further, we have a forward looking infrared camera that is helping us to detect emissions and we have a leak detection and repair system around just to make sure that we don’t have that going into the atmosphere,” said Mshelbila.

But much more than that, NLNG has started having conversations around measuring its methane and what to be done to reduce that. The initial vision was to have a company that would help to reduce emissions and decarbonize the country.

Speaking to this vision, the NLNG boss affirmed that “we have stayed true to that vision because we have recognized that it is a vision that is even bigger than us. So, for the next 30 years, that started in 2019, and we call it Fit for 50, by that time in 2049, we will be 50 years in operation, and we have set ambitious targets for ourselves again, and part of it is the Train 7 that you know.

“But we have started scouting studies and we have started looking at Train 8 and the way we are looking at Train 8 is not the conventional way of just increasing capacity, it is one that helps us to reduce our overall greenhouse gas emissions as a plant, and those are the things that we are subjecting to our decision making process to ensure that our decarbonization targets are achieved,” Mshelbila concluded.      

Speaking earlier while declaring the summit open, President Muhammadu Buhari called on investors in the energy industry to avail themselves of the conducive environment provided by the Petroleum Industry Act (PIA) to accelerate investment in the Nigerian energy sector.

The President, who was represented by the Minister of State for Petroleum Resources, Chief Timipre Sylva, said with the PIA in place, there should be no excuses for players in the nation’s petroleum industry not to deepen their investments, especially in the gas sector.

He also noted that the world was moving away from fossil fuel, and that it would be in the interest of the country to speed up its fossil fuel exploitation and make good use of the resources for the betterment of the country on time rather than abandon the huge oil and gas reserves before the time will run out. Buhari acknowledged the demands for energy transition and assured that the country was prepared to face the challenges.

The Secretary–General of the Organization of Petroleum Exporting Countries (OPEC), Dr. Mohammad Sanusi Barkindo, the Secretary -General of African Countries Petroleum Producers’ Organisation (APPO) Dr. Omar Farouk Ibrahim, and other African Energy Ministers at the summit defended investments in fossil fuels. They insisted that the global push for energy transition to net zero carbon emission is one-sided, biased and not in favour of Africa, and therefore demand for fair hearing as the conversation  continues before the next conference of parties (COP27) summit which was scheduled to hold in Egypt later this year. 

In terms of gas production, 2018 figures show that Nigeria produced 1.7 trillion cubic feet of natural gas, excluding gas flared or recycled the same year. Daily gas production remains low, despite the large proven and unproven reserves the country holds. The National Gas Commercialization Policy and the Nigerian Gas Flare Commercialization Programmme (NGFCP) are some of the frameworks through which the government seeks to deepen and accelerate the growth and development of the gas sector and end gas flaring, reduce imports and drive domestic consumption of gas through the development of the national gas economy.

This is why industry watchers have described the current move by the FG to bring gas flaring to an end in the country as the right step in the right direction.

In the petroleum industry, gas flaring represents the loss of associated gas, and this loss often results from inadequate commercial gas extraction, processing and transportation infrastructure. Some oil and gas companies prefer to flare gas as this prevents over-pressuring of industrial plant equipment. Gas is flared through a flare stack, a gas combustion device used in refineries, chemical plants and gas processing plants.

According to the World Bank, gas flaring costs the global economy $20 billion in 2018 alone and the Nigerian economy is believed to have lost an estimated N233 billion ($761.6 million) to gas flaring, which translates to 3.8% of the global total in 2018.  

Although the percentage of gas flared in Nigeria has been reducing since 2002, its impact on the environment and human health still remains relatively high.  In 2018, the country ranked among the top 10 gas-flaring countries in the world, with 7.4 billion cubic feet volume of gas flared. In percentage terms, the total gas flared in Nigeria accounted for 6.9% of the volume flared by the top 10 gas-flaring countries. According to National Environmental, Economic and Development Study (NEEDS), the environmental cost of gas flaring in Nigeria amounts to N28. 8 billion ($94 million) annually.

The Managing Director of Chevron Nigeria, Rick Kennedy, believes that “Nigeria is endowed with all the necessary requirements for a growing and sustainable energy industry. Critical among these is a large hydrocarbon resource base, including abundant gas resources, a growing demand for energy, especially in the form of power generation, and a large population of young, talented human resources, assuring of a very skilled, innovative, talented workforce well into the future.”

Chevron prides itself as an active participant in building a secure oil and gas future wherever it operates around the world, including in Nigeria and other countries in Africa, while still affirming its belief that energy is essential in achieving a more prosperous and sustainable world, and that the future of energy is lower carbon.

The company’s intent is to leverage its strengths to deliver lower carbon energy to the world, and in all areas of operation, it is committed to being a leader in efficient and lower carbon exploration, development, production and the manufacture of traditional energy, while at the same time growing lower-carbon, commercially viable businesses that would be a bigger part of the future.

As Kennedy put it, “we support the goals of the Paris Agreement, we are committed to lowering our portfolio of carbon intensity on a full cycle basis and to being transparent about our progress. We are taking actions to creating a lower carbon future by reducing the carbon intensity of our operations and assets today, increasing use of renewables and offsets, and investing in low carbon technologies, such as hydrogen, carbon capture, utilization and storage (CCUS), and renewable fuels.

He also insisted that some of the enablers of these lofty green targets will be policy and regulatory frameworks which will be essential to enable the evolution of the future energy system, as well as a stable and predictable business environment to draw the capital that is needed. Also, continued investment in growth and expansion, and in partnership will be key and critical, which is why Chevron values its partnership with the government of Nigeria and NNPC.

The company has announced that it is increasing investment in enhancing gas utilization and preserving biodiversity. It is common knowledge that Chevron supports global efforts to reduce emissions and is actively investing in current operations and assets to further environmental performance. This is apart from working with the industry to develop new innovative technologies and best practices to achieve a lower carbon future.

Notable investments are taking place today to advance projects, to improve energy efficiency of its current assets, drive flare reduction, fugitive emission reduction, and all these are happing today with the assets of Chevron in Nigeria.

Last year, Chevron announced the creation of a new organization, Chevron New Energies, to accelerate its energy transition strategy. The company is an endorser of the World Bank Zero Routine Flaring Initiative and is committed to ending routine flaring by 2030.

According to Kennedy, “we believe natural gas in an important fuel which will play a critical role as the world seeks to lower its overall carbon footprint. And towards achieving that here in Nigeria, we have reduced our routine flaring by over 95 per cent over the last 10 years and we will continue that journey.

“At the same time, we have become a leader in maximizing on-spec gas into the Nigerian domestic market, supporting gas utilization in the critical areas of power generation and gas-based industries.

We have always put people and the environment at the center of our energy conversation because we understand that the wellbeing of people everywhere depends on energy that is affordable, reliable and ever cleaner.”

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