-Gideon Osaka
As calls intensify for diversification of Nigeria’s economy from oil to other sources of revenue, the country’s energy investment is also gathering huge momentum.
Nigeria’s energy investment over the years have received boost especially in the area of gas infrastructure development.
Subsequently, with the uncertainty trailing oil exports and revenue due to the lingering impact of the pandemic, PriceWaterhouseCoopers (PwC), last month, advised Nigeria and other African countries to be strategic in their energy transition plans, while exploring opportunities in gas development.
Noting that much of Africa’s gas supply growth will come from Nigeria, PwC, in its Africa Oil and Gas Review 2020, themed: ‘Energising a New Tomorrow,’ added that the positive outlook for natural gas, which is often termed the renewable bridging fuel due to its lower carbon footprint, will see stronger price and demand recovery as countries move to rebuild their economies.
The report reflected the opportunities in gas export for Nigeria, noting that Africa consumes 63 per cent of its total gas production, predominantly for power generation, even though the continent’s gas exporting countries saw a total decline of more than six per cent in 2020 from 39.7 million tonnes per annum (mtpa) in 2019 to 37.3 mtpa in 2020.
Available data show that Nigeria produces 49.3 billion cubic meters (bcm) of gas, with 24.8bcm or 50.3 per cent exported to Europe and Asia.
Indeed, projections on natural gas demand in Africa show a gradual increase over the next 20 years with global peak gas-only expected towards 2035 and 2040.
Already, oil majors are reviewing their portfolios with a view to embracing transitioning to renewables.
With nearly two-thirds of the continent lacking access to electricity, and most countries depending on expensive fuel imports, there are calls for increased energy spending and the need to explore hydrocarbons for domestic growth rather than solely trading such.
Given the global migration from oil to cleaner fuels, such as gas, the Nigerian economy is going to become increasingly dependent on gas and less dependent on crude oil. The gas sector simply cannot be allowed to follow the same path as the power sector as this would have terrible consequences for our economy.
According to the NNPC, demand for natural gas by the country’s domestic market, which currently comprises mostly power and industries, would rise from 1.5 billion standard feet per day (bscfd) to 7.4bscfd in 2027.
However the Corporation said it was making plans to plug this expected rise in demand with seven natural gas projects it christened the ‘Seven Critical Gas Development Projects (7CGDP),’ which would bring in about 3.5 billion standard cubic feet daily (bscfd) of gas in 2021.
Speaking at this year’s Atlantic Council Global Energy Forum, on the topic, “Delivering Energy Access in the Developing World,” the Group Managing Director of NNPC, Mallam Mele Kyari noted that although the country aligns with the push for renewables, it is now focused on using its oil and gas resources in developing infrastructure till when the commodities become less relevant in about 40 years.
He disclosed that Nigeria, with significant gas reserves, has approximately $3 to $4 billion projects currently ongoing in the sector, some of which have reached advanced stages, in the country’s effort to rev up production for domestic use and for export.
“We are not a petroleum country in real sense. It’s agreed that we have the 10th largest reserve of oil and a significant gas reserve. Of course, what everybody recognises is the oil.
“The reality today is that we have a country in excess of 200 million people. Seventy per cent of this population is well below 30, with a growing middle class and one of the fastest-growing economies in Africa.
“More importantly, for us today, an energy deficient country, over 60 per cent of our country is not electrified, the poverty level is very high, extremely challenging. 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 of focus today, many things are happening in the energy sector.
Quest to boost revenue
Another area the Nigeria’s energy investment is targeting is the area of boosting revenue to contribute significantly to the Gross Domestic Product (GDP).
Although the oil and gas sector tops Nigeria’s revenue generation and export commodities, President Muhammadu Buhari emphasized and harness more resources and derive value from the sector going by an order to relocate the sector’s regulatory body; the Department of Petroleum Resources (DPR) to Abuja.
The Minister of State for Petroleum Resources, Timipre Sylva, noted the need for holistic coordination of the sector to achieve the projected goals while laying the foundation for a new office of the DPR in Abuja.
He insisted that the government looks forward to an enabling environment to support oil and gas businesses across the value chain for operators, service providers, investors, relevant government agencies, international collaborators, and other stakeholders.
This is coming few days after President Buhari inaugurated the National Oil and Gas Excellence Centre (NOGEC), in Lagos, to boost operations in the petroleum sector, Sylva said the Federal Government was looking to a new DPR, “for the good of our stakeholders and the benefit of the Nigeria Oil and Gas industry.”
The Minister also said efforts are ongoing to ensure the passage of the Petroleum Industry Bill (PIB), amid the public hearing at the National Assembly, adding that the document could become a law in a few months.
Corroborating the submissions of the Minister, Director of DPR, Sarki Auwalu, said the Department is looking to provide necessary support for the administration’s drive to explore oil across the country, adding that the current activities across the inland basins would receive a boost with the relocation to the seat of power.
He said the prevailing efforts would support DPR’s commitment to enabling businesses and creating opportunities for the industry to thrive, using a robust regulatory framework and service instrument.
