By Yange Ikyaa
Nigeria, as a resource-rich country with opportunities to sustainably create prosperity for its citizens, has recently been making vocal claims about maintaining a strong posture of balanced energy transition that recognizes the role of hydrocarbons for many years in the future, and even much longer than maybe currently anticipated by other jurisdictions around the world.
This new argument and current narrative about Nigeria taking the driving seat in charting the right course for Africa to pursue net-zero carbon ambitions is understandably hinged on the recent corporate status of the Nigerian National Petroleum Company (NNPC) Limited.
With NNPC Limited now running as a fully privatized commercial enterprise, it is popularly believed by the Company’s promoters that Nigeria is well-positioned and better structured to lead the African continent in a just and gradual energy transition.
One of those who believe in this possibility is Mallam Mele Kyari, the Group Chief Executive Officer (GCEO) of NNPC Limited. This is because, very recently on April 6, 2023, the NNPC boss reiterated his previous usual assurance that Nigeria is leveraging the provisions of the Petroleum Industry Act (PIA) to attract more investments into its petroleum sector in a carefully considered approach to continue to guarantee access to energy for the nation, while aligning with global energy transition goals.
Kyari sounded out his position when he was delivering a keynote speech at the 2023 Society of Petroleum Engineers’ Oloibiri Lecture Series and Energy Forum (OLEF) with the theme “Effective Gas Resource Utilization: A Lever for Enhancing Energy Security and Achieving Net-Zero Emission Goals in Nigeria.”
According to him, Nigeria’s huge natural gas reserves provide us with ready access to low-carbon energy to address energy poverty. And just like some other African countries, Nigeria is also endowed with an increasingly young population, which needs a stronger economy to continue to generate beneficial employment to lift citizens from poverty to prosperity.
This, the NNPC boss said, will no doubt continue to push “our nation’s” energy demand faster than what renewable energy technologies are likely to offer in the near future. He also praised the OLEF 2023 organizers, saying that the gathering of industry professionals, which is annually organized by SPE, has contributed significantly to the progress made in the oil and gas sector in Nigeria.
His words: “This event is coming at a historic moment of energy relevance in the context of geopolitical realities, and environmental concerns, while the immediate impact of dearth of investment on global commodity prices is gradually reshaping countries and companies’ energy decisions.”
According to NNPC data seen by Valuechain, Nigeria’s domestic gas infrastructure network has an existing capacity to transport about 6.9 Billion Standard Cubic Feet (BCF) of gas to support power generation and gas-based industries.
The company claims that its huge investment in gas infrastructure is hinged on growing natural gas reserves for Nigeria, thus supporting the nation’s aspiration to create Africa’s biggest industrial hub that is sustainably powered by low-carbon energy.
Regional Gas Infrastructure Projects and Projections
Valuechain findings show that NNPC Limited is actively taking advantage of Nigeria’s huge natural gas reserves of over 200 Trillion Cubic Feet (TCF) and with a potential to grow to 600 Trillion Cubic Feet (TCF), even as more investment is being expected due to the recent resolution of the Production Sharing Contract disputes with partners.
These significant reserves are expected to serve as a low-carbon energy alternative that will support growth in the power and industrial sectors, address energy poverty, reduce carbon-footprint and create more employment opportunities.
NNPC Limited has always voiced out its claim that it is actively playing a leading role in the realization of the Federal Government’s National Gas Expansion Programme (NGEP), which seeks to deepen natural gas utilization as an alternative transportation fuel, and also as an important feedstock for the development of gas-based industries.
In the words of Kyari, “we are working assiduously to ensure timely delivery of major domestic gas pipeline infrastructure projects including the Abuja-Kaduna-Kano gas pipeline corridor and associated power plants. NNPC is also making progress on the planned Nigeria-Morocco and the Trans-Sahara Gas Pipelines that will connect West African countries to deliver natural gas to the international markets.”
For the gas export market, the on-going NLNG Train 7 is being positioned to expand Nigeria’s LNG production capacity from 22mpta to about 30 million tons per annum (30 MTPA).
Valuechain learnt that, as part of its sustainability strategy, NNPC is deploying carbon-reduction initiatives to gradually decarbonize our operations and improve our compliances with global emission reduction.
However, all this cannot be achieved if the country does not have adequate provision for security of our operations. In order to address any security challenges, Kyari said that NNPC Limited will continue to further deepen collaboration among all the relevant stakeholders, including government security agencies, host communities in order to enhance Nigeria’s energy security. But this will require the provision of adequate and timely investments to build resilient energy systems that are capable of delivering energy to support socio-economic development in a sustainable manner.
And in order to secure Nigeria’s relevance in the global energy market of today and the future, Kyari assured that NNPC Limited will constantly leverage partnerships with the industry, governments, research institutions and the academia to strengthen its Renewable Energy Division to pursue commercially-viable new energy ventures in line with Nigeria’s net-zero aspiration by 2060.
The goal of NNPC Limited is to be the dynamic global energy company of choice that is committed to sustainably delivering energy for today and energy for tomorrow. Kyari has always maintained that “our continent and our country is energy deficient and the bridge fuel to energy security and sustainability of oil and gas operations is gas.”
In the same vein, the Permanent Secretary of the Federal Ministry of Petroleum Resources, Ambassador Gabriel Aduda, expressed that energy security and achieving net-zero emissions are two important goals that also present pressing challenges for our time, and that they are particularly very relevant to Nigeria because of our positioning at this point especially in the African Petroleum Producers’ Organization (APPO) and also as the 11th major producer worldwide.
It is already common knowledge that globally, there are efforts towards the creation of an international market for fossil energy that minimizes gas flaring, methane and carbon emissions across the value chain to the fullest extent practical.
And Nigeria became the first African country to regulate methane emissions from its oil and gas sector in 2022, while achieving the global methane pledge goal of cutting anthropogenic methane emissions by 30 percent by the year 2030.
It is believed that achieving this goal will draft significant security and several other development gains, and huge successes have been achieved with the enactment of the PIA (2021). This has led to the creation of regulatory frameworks with clear-cut mandates for the growth and development of the oil and gas sector in general, and if properly implemented, the PIA will present the gold standard of natural resource management with clear and separate roles for subsectors of the industry.
This will mean the emergence of a commercially-oriented and profit-driven national petroleum company, the actualization of transparency, as well as good governance and accountability in the administration of oil and gas, including the economic and social development of host communities alongside environmental remediation and a business environment conducive for oil and gas operations to thrive.
It also creates the Midstream Gas Infrastructure Fund for the purpose of supporting investments in the development of gas infrastructure, such as pipelines, storage facilities, and processing plants to facilitate the transportation and storage of gas across the country and beyond.
This is because the efficient use of gas resources is a key component of achieving both energy security and reducing emissions. Gas is a cleaner burning fossil fuel than oil or coal and it can play a significant role in reducing greenhouse gas emissions.
In addition, the utilization of gas can help to diversify Nigeria’s energy mix and reduce the country’s dependence on oil. It is in line with this that President Muhammed Buhari in March 2021 declared January 1st 2021 to December 31st 2030 as Nigeria’s Decade of Gas, and as the period that the government has chosen to accelerate domestic and export gas production and utilization.
According to Aduda, “we are already achieving very amiable results in the domestic intake of LPG and CMG in several small and medium scale industries across the country.”
Nigeria is known to be more of a gas nation than it is of oil and there are a lot of opportunities to partner and improve domestic gas utilization.
But, the Permanent Secretary insists that “as we work to achieve effective gas utilization, it is also very essential to promote public awareness and education on the benefits of gas as a cleaner and more affordable source of energy. It is not enough to keep working at it for profit alone, we need to let the people know why we do what we do.”
This will require targeted outreach and engagement with communities, as well as the development of programs that provide affordable access to clean energy for households and small businesses.
For the Commission Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Engr. Gbenga Komolafe, who was represented by the Executive Commissioner Production and Development, Dr. Nuhu Habib, “at the core of energy transition and net-zero is the issue of global and socio-economic viability, and the global socio-political balance can only be achieved if there is availability of sufficient, affordable, reliable, accessible and sustainable energy.”
The Authority Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, who was represented by the Authority’s Executive Director of Health, Safety, Environmental, and Community, Dr. Mustafa Mamude, also expressed his own views on the gas resource utilization in Nigeria.
His words: “As a nation, we must begin to seek more ingenious ways to develop the vast potential from our natural resources by creating an enabling environment through the framing and formation of policy instruments and legislation that will specifically address the peculiarity of Nigeria’s energy trilemma of security, affordability and sustainability through the three core areas of finance and investment, in-sector diversification, and indigenous capacity development.”
He also described gas as a resource of many facets, and that gas is power, fuel, food, industry, product, and development.
In order to fully activate this benefit for value addition to the Nigerian economy, the Authority has drafted 20 regulations which will unlock these benefits, once operationalized. Also, 12 of these regulations have been gazetted, while eight are still undergoing various stages of regulatory drafting and review.
Furthermore, out of the 12 gazetted regulations, five of them are gas-based, even as the Authority has drafted the Greenhouse Gas Emission in the Midstream and Downstream Regulation and it is just about to be signed by the Authority Chief Executive.
Nigeria’s quest to make its largest energy company an undisputable leader in Africa and probably around the world may not be unconnected with the unprecedented industry success of the country’s OPEC ally, Saudi Arabia.
This is because the oil giant, Saudi Aramco, reportedly earned $161 billion in 2022, claiming the highest-ever recorded annual profit by a publicly listed company, despite drawing immediate criticism from activists.
The monster profit by the firm, known formally as the Saudi Arabian Oil Co., came off the back of energy prices rising after Russia launched its war on Ukraine in February 2022, with sanctions limiting the sale of Moscow’s oil and natural gas in Western markets.
Aramco also hopes to increase its production to take advantage of market demand as China reenters the global market after lifting its coronavirus restrictions. That could raise the billions needed to pay for Crown Prince Mohammed bin Salman’s plans to develop futuristic cityscapes to pivot Saudi Arabia away from oil.
“Given that we anticipate oil and gas will remain essential for the foreseeable future, the risks of underinvestment in our industry are real — including contributing to higher energy prices,” Saudi Aramco CEO and President Amin H. Nasser said in a statement.
Profits rose 46.5% when compared to the company’s 2021 results of $110 billion, as Aramco earned $49 billion in 2020 when the world faced the worst of the coronavirus pandemic lockdown, travel disruptions and oil prices briefly going negative.
