Nigeria has again restated its demand for a fair, just, equitable and sustainable energy mix that entrenches the principles of inclusiveness and guarantees energy security in the quest for global energy transition.
The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, reiterated the demand as the head of the Nigerian delegation to this year’s Offshore Technology Conference (OPC) in Houston, Texas, USA.
Komolafe stated this in his address stated this in a paper he presented on Tuesday on “Energy Transition and Nigerian upstream oil and gas landscape: The Journey, Challenges and Way forward” at the annual technology conference.
The NUPRC boss said while deliberations on the global energy transition to renewable and sustainable energy away from fossil fuel was going on, proponents must consider the right of nations like Nigeria to harness their energy resources for their development goals.
“They should consider the freedom of nations to attain the right energy mix in multiple pathways and sustainable energy supply,” the NUPRC boss told participants at the conference.
The Commission Chief Executive’s said his presentation was in line with the overall theme of the conference, Energy Transition in Africa: The Journey, Challenges and Way Forward”, but with main focus on the Nigerian upstream sector.
He said the Nigerian perspective was relevant considering the significant momentum in energy transition, the attendant changes in energy economy, as well as the expectations of stakeholders on the successful implementation of the Petroleum Industry Act (PIA) 2021.
The strength of the Nigerian economy, he noted, was closely tied to a volatile crude oil price at the international market, with petroleum exports accounting for 86 percent of total export revenue for the economy.
Against this background, the NUPRC chief said it becomes self-evident that Nigeria could not do away with its fossil fuels just yet, stressing the need for delicate balance to be struck between the energy transition agenda and the human transition.
In view of this, he said the Nigerian Government was left with no choice than to reject the notion of a single pathway to net-zero, preferring instead the concept of ‘just’ energy transition, which takes into cognisance 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 energy transition, Komolafe emphasised should and must exist in order to ensure that no country was left behind in the process of achieving net-zero by 2050.
Accordingly, he said the Nigerian Government declared natural gas as its transition fuel, with emerging realities confirming that natural gas was the country’s destination fuel, with a projection that gas would form a significant part of energy mix for Nigeria by year 2030 and beyond.
Highlighting the vast potentials of Nigeria’s oil and gas resources, Komolafe reviewed the cautions by the Intergovernmental Panel on Climate Change (2021) on reduction of carbon emissions, and the Roadmap for global energy sector issued in 2022 by the International Energy Agency (IEA) on Net Zero by 2050.
He said these issues provided the context within which Nigeria’s response to the energy transition and consequently the role of natural gas should be discussed.
These perspectives, he noted, were indicative of a new course for fossil fuel dependent economies need to chart to anticipate and prepare for the future.
Nigeria, he said, has for long recognised that the global shift towards decarbonised economies would lead to a structural decline in demand for unabated fossil fuels, adding that the increasing cost competitiveness of renewable energy sources would present key risks and challenges for fossil fuel dependent economies like Nigeria.
He said chief among these risks were reduction in national revenue and consequential fiscal vulnerabilities that may arise as a result of the energy transition.
The reduction in fossil fuel revenue without sufficient time and support to manage macroeconomic risks and the structural transformation required to build a diversified, sustainable and resilient economy, he pointed out, would be disadvantageous to the Nigerian economy.
Again, as a nation, he said Nigeria’s performance in terms of the Sustainable Development Goals (SDGs), was a very strong indicator that energy transition policy for Nigeria should be formulated equitably within the context of improving the achievement of the SDGs.
This, he noted, would be achieved by reducing poverty and hunger, improving good health, well-being and quality education, achieving clean water and sanitation, creating decent work and economic growth, achieving improved environment through deployment of carbon capture technology, amongst others.
Aside from the SDGs challenges, Komolafe told participants that Nigeria has the world’s largest energy deficit, with an estimated 85 million of the 200 million Nigerians lacking access to grid-supplied electricity or clean cooking fuel.
“This is equivalent to 43% of the country’s total population, a situation that results in an estimated annual economic loss of up to 2% of gross domestic product (GDP). Renewable energy holds significant potential to alleviate these challenges, but absorption capacity issues limit the amount of variable power generation which can be accommodated by the grid.
“There are also issues relating to technology, resource and manpower constraints, dearth of know-how, capacity development and utilisation as well as the prohibitive cost of renewable energy, which collectively constitute barriers to uptake and deployment,” he said.
During the COP26 conference last year, Komolafe said President Muhammadu Buhari declared that the country’s target end date for achieving net-zero emissions was not 2050, but 2060.
As a country, he said Nigeria also defined its decarbonisation pathway to achieve the 2060 target through Nigeria’s Energy Transition Plan (ETP).
He said now that gas Wai identified as the country’s pathway to the energy transition, the Nigerian government has designed a programme that would ensure gas actually played a role to lift the country out of the challenges it was confronting, to drive industrial development.
In this direction, he said 2021 to 2030 was declared the Decade of Gas, coming on the back of 2020, which was declared the ‘Year of Gas’.
At the heart of the programme, he said Nigeria’s vision was to drive infrastructure and industrial development to prosper its citizens and make life more meaningful to all.
“Natural gas ticks all the boxes as the vehicle to help the government achieve this aspiration, which is why we embraced the resource to help turn around the economy.
” The work done so far has aggregated the gas demand and supply views, infrastructure requirements and the suitable pricing framework which will serve as the enabler for unlocking the investments for the required infrastructure that will drive the convergence of demand and supply.
“That work reveals that gas demand grew at an average of 3.3% per annum between 2010 and 2020. This was driven largely by growth in domestic demand enabled by an improvement in Domestic Supply Obligation fulfilment to 33% in 2020, compared to 22% in 2010.
“Between 2020 and 2030, demand is expected to grow at a compound annual growth rate of 16.6% p.a., driven by major projects such as the Nigeria Liquefied Natural Gas (NLNG) Train 7, in the base case scenario, and Nigeria/Morocco pipeline, NLNG Train 8 and Ajaokuta-Kaduna-Kano (AKK) pipeline, in the high case scenario,” he said.
A comprehensive analysis of the Nigerian Gas play, he said, showed that gas demand could grow to 22.5 billion cubic feet per day by 2030, compared to 4.9 billion cubic feet per day in 2020.
Furthermore, he revealed that domestic gas consumption could account for 60 percent of total demand by 2030, compared to 30 percent in 2020, adding that in just a decade, the landscape could change exponentially, especially if the power sector challenges were resolved.
On the supply side, he said onshore Non-Associated Gas was projected to account for 47 percent of total gas supply by 2030, pointing out that the import scenario showcases the opportunities in gas development in the Nigerian upstream sector.
Given that most players within the international financial ecosystem were moving away from funding fossil fuel development projects, he said there was need to incorporate into Field Development Plans (FDPs) to attract funding for decarbonisation initiatives.
“The opportunity for investment and fantastic returns remains undiminished and is continually available to prospective investors,” he said.
On methane emission reduction,Komolafe said reducing methane leakage was the single most important and cost-effective way to bring down emissions and improve efficiency in the oil and gas industry,as methane emissions from gas production, transport and use, could undermine the benefits of the use of gas over other fossil fuels in terms of their carbon footprint.
The NUPRC, he stated, has intensified efforts to eliminate flared gas, while arresting methane and other fugitive gas emissions.
With the recently issued “Guidelines for Management of Fugitive Methane and Greenhouse Gases Emissions in the Upstream Oil and Gas Operations in Nigeria”, he said the Commission was progressing towards the operationalization of the Global Methane Pledge, by fostering peer-learning on regulatory approaches to tackling flaring, venting and methane emissions in the upstream oil and gas sector.
Other programmes included the Nigerian Gas Flare Commercialisation Programme (NGFCP) for 49 flare sites expected to harness a combined volume of about 300 million standard cubic feet of gas per day through established technologies such as mini-LNG, Compressed Natural Gas (CNG), Liquefied Petroleum Gas (LPG) and Gas-to-Power, etc.
Also, the flare commercialisation programme, he said was part of the Commission’s initiatives in compliance with Section 108 of the PIA and is aimed at driving Nigeria’s target to end routine gas flaring within this decade, supporting the Nigeria Energy Transition Plan (ETP), creating value from her gas resources and boosting supply to the rapidly growing gas market.
To drive a significant increase in the production of African carbon credits, while ensuring that carbon credit revenues were transparent, equitable, and create good jobs, Komolafe said the Commission has established a new “Energy Transition and Carbon Monetization” department, saddled with the regulation of the oil and gas carbon market.
The new department, he said, would also provide a mechanism to identify suitable opportunities to promote decarbonization efforts, track progress of implementation and monitor results.
