Minister of State for Petroleum Resources, Timipre Sylva (2nd from right) with CEO NUPRC, Gbenga Komolafe (left), US Secretary of State for Energy, Jennifer M. Granholm, and NUPRIC Board Secretary/Legal Adviser, Olayemi Anyanechi.
By Akpandem James
Nigeria’s energy transition agenda, in line with global direction, received a boost on Thursday at the CERAWeek energy conference in Houston, Texas, as the United States Government indicated interest in a bi-lateral partnership that would see the conversion of the enormous gas resources currently being flared to ammonia.
Ammonia has the potential of being a huge revenue earner for the country especially as the European Union, in pursuit of the net zero-emission programme, has unveiled its long-anticipated plans to make importers and non-EU manufacturers pay for the carbon emissions associated with the goods and materials they sell in the EU, thus impacting on vessels powered by fossils fuels entering EU territory.
Since running such vessels during that tax regime will not be economically viable, there is the need to redesign engines of such vessels; and attention is already being focused on ammonia as an alternative fuel source, to replace heating oil and other fossil fuels. The resort to ammonia is because it is not just cleaner, but a cheaper source of energy.
Invariably, it means there would no longer be an easy and attractive market for heating oil, one of the most highly sought-after products in the configuration of Nigeria’s refineries.
The adoption of the Carbon Border Tax by the EU has the potential of hurting the Nigerian economy which is largely serviced with proceeds from its hydrocarbon potentials.
This would compound the challenge already posed by the vigorous pursuit of the zero-emission plan by the developed countries, due to the reduced earnings from Nigeria’s refinery configured products such as heating oil (i.e. LPFO, HPFO).
The Paris Agreement and the United Nation’s Framework Convention on Climate Change seeks to limit the development of oil and gas projects in the pursuit of more environment friendly energy options – from fossil fuels to green and renewable energy – in the next two decades.
This poses enough threat to the country’s major revenue stream, which is why sustaining current revenue drivers and considering other viable options became the major thrust of discussions by Nigeria at the conference.
The energy transition agenda therefore became the centre of focus for the Nigerian delegation led by the Minister of State for Petroleum Resources, Chief Timipre Silva and which included the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission, Engr. Gbenga Komolafe and the Board Secretary and Legal Adviser to the NUPRC, Barrister Olayemi Anyanechi.
The team continued to drive conversations around energy transition in a multi-track approach at the various meetings held with top officials of the global energy circuit.
It argued that instead of a complete abandonment of further development of hydro-carbon infrastructure and phasing out fossil fuel use within the stipulated period, a multi-track approach where gas would be adopted as transition energy source would be fair and just to be pursued, as that was more practicable and sustainable, particularly in respect of developing countries.
Chief Silva explained that Nigeria already has a transition plan which is predicated on a multi-track approach to developing energy resources. One of those is a focused development of the country’s gas resources during which period a diversified economy would be built around technology and other energy sources.
That, he stressed, would help a great deal in boosting the country’s revenue levels and sustaining its economy.
Discussions on the subject were taken from different perspectives, including zeroing-in on gas potentials and the implication of continued gas flaring and reinjection.
The effect of flaring on the environment and health of the people of oil-bearing communities was specifically highlighted as the team explored concrete ways of ending the menace.
The point of convergence is the responsible monetization of Nigerian’s gas resources which the American counterparts were in agreement. The US team appreciated the multifaceted approach to curtail emissions proposed by the Nigerian government and made suggestions on innovative ways to develop stranded gas resources in a more responsible manner, some of which include the use of Blue Hydrogen which is obtained when natural gas is split into hydrogen and carbon dioxide either by Steam Methane Reforming (SMR) or Auto Thermal Reforming (ATR).
However, the carbon dioxide is captured and stored, which in return mitigates the harsh impact on the environment.
This, the US team suggested would be a good way for Nigeria to utilize its abundant Natural gas resources of over 200 trillion cubic feet (TCF).
During one of the several meetings which involved the US Secretary of State for Energy, Jennifer M. Granholm, and a second which involved Honourable Harry Kamian, Assistant Secretary of State for the U.S. Department of State Bureau of Energy Resources, the United States Government showed interest in collaborating with the Nigerian government to develop the country’s gas resources, recognising that Africa may indeed need to be given separate recognition, as long as development of natural gas hastens the net-zero emissions target of the Federal Government of Nigeria and the world at large.
Furthermore, the U.S. Department of Energy promised to support Nigeria with development partners to put through the framework for the development of its gas resources
Riding on the optimism of the meeting with the U.S. Secretary of State for Energy, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) team met with Brendan Kelly of the U.S. Department of Commerce and Puneet Sharma of CyanNH3 to discuss extensive methane abatement opportunities in Nigeria, in partnership with the United States government, especially in the area of conversion of gas to ammonia, for use either as fertiliser or for export.
The team highlighted the fact that the proposed EU Carbon Border Tax would put severe financial pressure on the use of LPFO and HPFO by vessels and provide a renewed impetus for producers around the world to accelerate efforts to slash their carbon footprints, thus creating a massive opportunity for the use of ammonia as the fuel of choice.
In response, the US team promised to collaborate with the Nigerian government by funding a study to evaluate the viability of making Nigeria an Ammonia net export nation from the 218 sites which flare an average of 0.7 Billion cubic feet (BCF) of gas daily, with skid mounted innovative ammonia production equipment and other virtual pipeline development devices.
Moreover, the US Department of State and Department of Trade agreed to collaborate with Nigeria by working together with development partners to fund a study to mature these initiatives into full gas commercialization and convert the waste into a source of federation revenue generation, while eliminating the environmental degradation.
Finally, the successful take off of the project will not only open another massive revenue stream for the country but would tackle the challenges of environmental pollution and the resultant health challenges visited on the people of oil producing communities, as a result of gas flaring.
In essence, the success of ongoing discussions with the U.S. government and proposed development partners will not only arrest environmental degradation and guarantee the health of the people, it also has the potential to generate much needed foreign exchange for the country.
James is an Abuja-based communication consultant