Leading figures and industry experts from Nigeria's oil, gas, and power sectors converged in Lagos on Thursday, July 24, at the 4th Oriental News conference, to advocate for a more strategic and efficient utilization of the nation's extensive gas reserves, reports ITREALMS.
The consensus among the experts was that Nigeria's gas wealth is an indispensable asset for achieving an affordable and sustainable energy transition.
The conference, themed "Integrating Nigeria's Gas Potentials into Strategic Energy Transition Initiatives," featured insightful discussions on navigating the complexities of energy transformation while leveraging Nigeria's unique resources.
Temitope Ogedengbe, Manager, Energy Transition at Nigeria LNG (NLNG), cautioned against a "copy-paste" approach to energy transition, emphasizing the critical need for Nigeria to develop a strategy that genuinely reflects its local realities.
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The conference, themed "Integrating Nigeria's Gas Potentials into Strategic Energy Transition Initiatives," featured insightful discussions on navigating the complexities of energy transformation while leveraging Nigeria's unique resources.
Temitope Ogedengbe, Manager, Energy Transition at Nigeria LNG (NLNG), cautioned against a "copy-paste" approach to energy transition, emphasizing the critical need for Nigeria to develop a strategy that genuinely reflects its local realities.
"Our transition must leverage our unique strengths and resources to grow our economy," Ogedengbe stated, asserting that the country's energy strategy must prioritize economic growth, energy security, and national development.
Ogedengbe highlighted persistent challenges in gas utilization, lamenting that despite Nigeria's vast natural gas resources, a substantial portion is still flared or reinjected due to the absence of viable commercial arrangements.
Ogedengbe highlighted persistent challenges in gas utilization, lamenting that despite Nigeria's vast natural gas resources, a substantial portion is still flared or reinjected due to the absence of viable commercial arrangements.
"We’re not taking nearly the amount we should be. We are still flaring and reinjecting because there is no commercial arrangement to optimize this; for many reasons," he explained.
He acknowledged the potential of marginal fields but noted their economic production difficulties, while commending the Nigerian Upstream Petroleum Regulatory Commission’s (NUPRC) Gas Flaring Commercialisation Programme for attempting to address this issue.
He acknowledged the potential of marginal fields but noted their economic production difficulties, while commending the Nigerian Upstream Petroleum Regulatory Commission’s (NUPRC) Gas Flaring Commercialisation Programme for attempting to address this issue.
Ogedengbe further pointed out that a significant volume of Nigeria’s gas is still either exported or flared, with domestic utilization and value addition remaining underdeveloped.
"We are not investing enough, and we are not examining the right approaches," he added.
Discussing the global LNG market, Ogedengbe confirmed that a market still exists for Nigerian LNG, but noted a shifting demand, particularly in Europe, where buyers increasingly favor lower-carbon LNG options.
Discussing the global LNG market, Ogedengbe confirmed that a market still exists for Nigerian LNG, but noted a shifting demand, particularly in Europe, where buyers increasingly favor lower-carbon LNG options.
He stressed the importance of using operational levers to reduce carbon emissions, attract premium markets, and unlock funding opportunities through reduced taxes and levies.
NLNG, he revealed, remains central to Nigeria’s gas future, with plans to expand its capacity to 30 million tonnes per annum. As part of its energy transition strategy, NLNG is integrating technologies and processes to reduce emissions and generate carbon credits, employing offsets to reduce emissions both nationally and internationally.
Ogedengbe concluded by underscoring the necessity of a multi-pronged, well-coordinated approach to decarbonizing the country’s gas sector for long-term viability and global competitiveness.
Gas Shortage and Infrastructure Deficit Hinder Power Sector
Also speaking at the conference, former Minister of Power, Prof. Bart Nnaji, asserted that a chronic shortage of gas supply and significant infrastructure deficits continue to deter investment and impede the growth of Nigeria's power sector. Nnaji projected that gas-fired plants will dominate the country's power generation for the next two decades.
He attributed Nigeria’s persistent gas shortages to insufficient investment in gas infrastructure, calling for enhanced support from both government and the private sector.
Gas Shortage and Infrastructure Deficit Hinder Power Sector
Also speaking at the conference, former Minister of Power, Prof. Bart Nnaji, asserted that a chronic shortage of gas supply and significant infrastructure deficits continue to deter investment and impede the growth of Nigeria's power sector. Nnaji projected that gas-fired plants will dominate the country's power generation for the next two decades.
He attributed Nigeria’s persistent gas shortages to insufficient investment in gas infrastructure, calling for enhanced support from both government and the private sector.
Chairing the event, Nnaji addressed stakeholders across the oil and gas value chain, including key government officials, highlighting the underdeveloped state of the country’s gas sector due to inadequate investment in extraction, transmission, and transportation.
"The focus should not rest solely on government-led efforts; the private sector must also play a vital role," the former minister emphasized.
"The focus should not rest solely on government-led efforts; the private sector must also play a vital role," the former minister emphasized.
He urged the government to act as a true enabler, providing necessary support for infrastructure and gas harvesting, decrying "It’s baffling that with over 210 trillion cubic feet of gas, we still face local shortages. We’re unable to produce sufficient quantities to support operations across the country."
He noted improvements in operations this year but acknowledged past under-capacity, while also mentioning the ongoing development of a seventh train for gas production.
Nnaji drew a parallel with Nigeria’s historical abandonment of coal mining, reflecting a broader pattern of resource neglect. He reiterated the critical role of gas-fired plants in Nigeria’s power generation, stressing the need for a reliable supply to ensure thermal plants operate effectively.
Nnaji drew a parallel with Nigeria’s historical abandonment of coal mining, reflecting a broader pattern of resource neglect. He reiterated the critical role of gas-fired plants in Nigeria’s power generation, stressing the need for a reliable supply to ensure thermal plants operate effectively.
He cited Geometric Power Ltd, which he chairs, as one of the companies generating electricity through thermal sources. While acknowledging the role of renewable energy in rural electrification, Nnaji maintained that Nigeria’s baseload power must continue to come from gas or hydro sources, noting the limitations of hydropower that necessitate regional cooperation.
Engr. Chichi Emenike, Acting Managing Director and Gas Asset Manager of Neconde Energy Limited, raised alarm over the detrimental consequences of certain government policies on the ongoing energy transition.
Engr. Chichi Emenike, Acting Managing Director and Gas Asset Manager of Neconde Energy Limited, raised alarm over the detrimental consequences of certain government policies on the ongoing energy transition.
She stated that unpaid gas supplies, dollarized operations, and policy inconsistencies are actively discouraging investment in the sector.
Emenike revealed that Neconde, for example, has produced and supplied gas to electricity generation companies (GenCos) for nearly two years without payment.
Emenike revealed that Neconde, for example, has produced and supplied gas to electricity generation companies (GenCos) for nearly two years without payment.
"This is a serious conundrum, whereas we have sourced funds from somewhere to produce these gas molecules from our facilities. How am I going to pay back?” she questioned.
She further elaborated that Nigeria’s upstream gas production is heavily dollarized, making it costlier and more complex to sustain than crude oil development without a commercially viable framework.
She further elaborated that Nigeria’s upstream gas production is heavily dollarized, making it costlier and more complex to sustain than crude oil development without a commercially viable framework.
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"Don’t forget that the gas production industry is highly dollarized, including the requisite inputs. There is no part of the operation, including the technology, that is produced locally. The bulk of it has to be imported in US$," Emenike explained, detailing that drilling a gas well and its associated operations are all dollarized, making it more expensive than a crude oil well.
Addressing systemic issues within the gas-to-power value chain, Engr. Emenike highlighted the substantial cost of transporting over 500 million standard cubic feet (scf) of gas via the NGIC pipeline, estimating it to be over $500 million.
Regarding the financing and investment environment, Emenike called for a pragmatic national energy plan focused on achievable goals rather than lofty ambitions. "Let us start with what is doable; I mean the low-hanging fruit. Let us stop with big numbers. We should tidy up small fields that are struggling to juggle both CAPEX and OPEX," she urged.
Addressing systemic issues within the gas-to-power value chain, Engr. Emenike highlighted the substantial cost of transporting over 500 million standard cubic feet (scf) of gas via the NGIC pipeline, estimating it to be over $500 million.
Regarding the financing and investment environment, Emenike called for a pragmatic national energy plan focused on achievable goals rather than lofty ambitions. "Let us start with what is doable; I mean the low-hanging fruit. Let us stop with big numbers. We should tidy up small fields that are struggling to juggle both CAPEX and OPEX," she urged.
She pressed for urgent clarity on Nigeria’s stance on the energy transition and a realistic approach to funding. "Where do we sit as Nigerians today on this energy transition plan? Where is the money to run the transition?" she queried, warning that gas investors might choose other nations like Mozambique if Nigeria fails to establish a clear strategy.
Emenike further cautioned about the economic risks stemming from policy instability. "Gas economics is such that it must be end-to-end. Even before you draw down the first financing, you have tied that investment to a commercial arrangement," she stated, lamenting that "policy flip-flops and multiplicities of levies and fees" in Nigeria often derail investor's projected returns.
She insisted on regulatory reforms and an end to what she described as "rent-seeking behavior" by government agencies. "We have to deal with the rent-seeking attitude of our regulators to enable investors repatriate their investment financing," she said, criticizing agencies for imposing regulations and then levying fines for non-conformity, even when they create the crisis themselves.
Calling for collaborative efforts, Emenike advocated for infrastructure sharing and coordination within the value chain. "We need to leverage infrastructure to unlock the stranded assets across the country... We need to set the rules of the game," she emphasized, stressing the importance of investor confidence and a market-driven approach.
Emenike further cautioned about the economic risks stemming from policy instability. "Gas economics is such that it must be end-to-end. Even before you draw down the first financing, you have tied that investment to a commercial arrangement," she stated, lamenting that "policy flip-flops and multiplicities of levies and fees" in Nigeria often derail investor's projected returns.
She insisted on regulatory reforms and an end to what she described as "rent-seeking behavior" by government agencies. "We have to deal with the rent-seeking attitude of our regulators to enable investors repatriate their investment financing," she said, criticizing agencies for imposing regulations and then levying fines for non-conformity, even when they create the crisis themselves.
Calling for collaborative efforts, Emenike advocated for infrastructure sharing and coordination within the value chain. "We need to leverage infrastructure to unlock the stranded assets across the country... We need to set the rules of the game," she emphasized, stressing the importance of investor confidence and a market-driven approach.
"Every investor wants to see a clear line of sight. Market forces should be allowed to play out. The government should not create a monopolistic environment that stifles investment." She strongly advised against government involvement in business, urging them to cease short-term rent-seeking.
Emenike concluded by challenging the Federal Government to adopt an inward-looking, "selfish Nigerian plan" that prioritizes national interests, starting with smaller gas fields. She also urged the government to stop imposing benchmarks on gas for power, allowing market forces to dictate prices, and fostering flexibility and alliances among value chain operators.
Emenike concluded by challenging the Federal Government to adopt an inward-looking, "selfish Nigerian plan" that prioritizes national interests, starting with smaller gas fields. She also urged the government to stop imposing benchmarks on gas for power, allowing market forces to dictate prices, and fostering flexibility and alliances among value chain operators.
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