Nigeria has the option of adopting the energy mix or pursuing a transition. Any decision it takes will influence its trajectory between now and 2060, writes OpeOluwani Akintayo.
Nigeria is torn between the devil and the deep blue sea when it comes to energy options.
It is faced with the option of accepting the energy mix or embracing the energy transition.
Even after the Organization of the Petroleum Exporting Countries, to which Nigeria belongs and pledges allegiance to, has clearly stated that it would rather welcome an energy mix, the world’s super powers and the international energy companies, who currently control funding in the sector, wish OPEC would just accept energy transition.
Nigeria is a member of OPEC. The country accounted for three per cent of OPEC’s 80.4 per cent of the global oil production basket in 2021.
Typical of African countries, Nigeria was not prepared for a time like this when international oil companies would dump fossil fuels in pursuit of renewable energies and would follow their transitional agenda or face de-funding of their oil and gas projects.
Neither did the country save for the rainy day. The country’s officials have not allowed enough investments in developmental projects with money realised during the oil boom era.
Despite the de-funding of oil and gas projects by IOCs, the Nigerian government has not ceased to state where it stands – the part of gas as transitional fuel. It, however, has kept faith, hoping that the super powers would someday see reasons and still support its gas agenda.
The Nigerian Upstream Petroleum Regulatory Commission, two weeks ago, said Nigeria would forge ahead to deepen gas exploration by 20 per cent by the end of the decade, and by 50 per cent after the decade.
The Executive Commissioner, NUPRC, Rose Ndong, while speaking at the pre-conference workshop of the Nigerian Association of Petroleum Explorationists held in Lagos, said gas remained Nigeria’s transitional fuel.
“Beyond the sad story of Nigeria not meeting up to its energy transition plan, I want to reassure everyone that we are actually in a good place. Nigeria is already transitioning before the COP26 because we have already signed the gas pact. We are therefore fully committed to reach net zero by 2060 by making sure that companies bring their gas to the market, instead of flaring them. We definitely cannot abandon gas,” she said.
Group General Manager, NAPIMS, Bala Wunti, represented by the General Manager, Nigerian Petroleum Exchange, one of its arms, Andrew Grant, during his presentation at the same workshop, had said the world, Nigeria inclusive, would have little or no progress report on its energy transition efforts to present at COP27 meeting (going on) in Egypt.
According to him, Nigeria was currently not doing enough to achieve its 2060 commitment to net zero emissions and energy transition plan.
“Nigeria is working towards reducing our carbon footprints. We also have other things in that plan like the national forest policy, which aims to promote sustainable forest management because you know forests are very important in reducing carbon footprints.”
What the NURPC’s Ndong also said was that Nigeria was committed to energy transition plan to achieve net zero emissions by 2060.
This was the opportunity the renewable experts needed, an opportunity to mount pressure on both the international energy companies and the Federal Government to take advantage of the huge global opportunities in renewable energy.
According to them, the country no longer needed to continue with fossil fuel exploration.
During the Renewable Energy Stakeholders conference organised by the Renewable Energy Association of Nigeria in Lagos recently, renewable investors said fossil fuel was at the edge of chaos, noting that low funding from international oil companies in preference for greener energies was enough sign for the country to consider having an energy transition agenda.
“Fossil fuel is at the edge of chaos. This means that if oil and gas companies decide to shut down their economies against fossil fuels, the whole world would go into a spin. Africa should see opportunity in renewable energy instead of seeing it as a loss,” the Executive Vice President, Oando Clean Energy Ltd, Ademola Ogunbanjo, said during one of the sessions.
He argued that the global shift to renewable energy should not be perceived as a crisis.
“It is enough that the West has accepted how they have ruined the environment with their pursuit of various fossil fuel agendas. However, Nigeria should not see their renewable energy transition plan as a crisis but as an opportunity,” he said.
Rather than complain, he advised Nigeria to scale its capacity-building by assembling solar panels in-country and taking advantage of the funding provided by the African Development Bank.
“This is an opportunity to skill up our youths to drive energy transition,” Ogunbanjo added.
The experts also argued that to improve the quality of life without access to electricity, the Federal Government must facilitate increased funding for the renewable energy sector.
They said this should be by prioritising foreign exchange access for renewable energy solutions and the associated appliances through import duty waivers and subsidies.
According to them, provision of forex, granting of waivers and subsidies to businesses driving and promoting renewable energy awareness would go a long way in supporting demand and driving growth in the sector.
Executive Secretary, REAN, Salamatu Tunzwang, also argued on how the current energy crisis had forced the world to break into the future, which she identified as “renewable energy.”
Apart from the emergency branching off into the use of coal in Europe to solve immediate energy needs, the super powers have already committed to reaching net zero by dumping fossil fuels latest 2050.
Nigeria subscribed to 2060, hopefully thinking that it would by then, to a large extent, have extracted more and benefitted more from her crude oil before taking on its energy transition agenda, while on the other hand, alongside OPEC, push campaign that the world should embrace energy mix, which would take into consideration its vast fossil fuel resources.
Oil and gas are the biggest sources of energy, globally.
Nigeria is not only rich in them, it is also home to over 40 other commercially viable minerals (including tin, gold, iron ore, coal, limestone, niobium, lead and zinc) straddling over 500 mining sites across the country. The earnings from these natural resources, especially oil and gas, help to bolster the country’s status as largest economy in Africa.
Despite being the largest producer, consumer and exporter of oil and gas in West Africa, Nigeria’s energy sector remains challenged and retarded, making it about the only oil and gas producing country among OPEC member-states unable to record significant growth and fulfil the energy needs of its citizens in recent times. While a source ascribed this to lack of action and under-investment in Nigeria’s petroleum industry, others say it is a result of corruption and poor resource mismanagement in the industry.
Energy mix or transition?
S & P Global said energy transition refers to the global energy sector’s shift from fossil-based systems of energy production and consumption — including oil, natural gas and coal — to renewable energy sources such as wind and solar as well as lithium-ion batteries.
On the other hand, Energy Education, which provides enlightenment on energy-related issues, said the energy mix of a country was the combination of different primary energy sources making up its total primary electricity supply.
A consultant on DFID-funded Facility for Oil Sector Transformation, managed by the Oxford Policy Management, Dr. Dauda Garuba, said he had always been a fan of energy mix ahead of energy transition.
“The transition will ultimately happen, but Nigeria shouldn’t be railroaded into it,” he said.
As a country, Nigeria is, by all measurable standards, blessed with numerous natural resources estimated at over 40, although oil and gas remain its main revenue earners. The country is one of the top 10 producers of oil and gas in the world and the first in Africa, with proven reserves of 37.05 bn blue barrels and 209.5 trillion cubic feet.
Dr. Garuba said, “This recognition of the pivotal role of energy resource to human existence accounts for its place in the Sustainable Development Goals and constant reforms by countries. Goal 7 seeks to ensure access to affordable, reliable, sustainable and modern energy for all. Deriving from the fact that energy is largely a derivative of natural resources, the sustainability of its access and delivery for use is dependent on the effectiveness underpinning their management.
“It is in this context that natural resources – particularly oil, gas and minerals – share the tendency to make or mar the fortunes of countries rich in them.”
Chairman of African Energy Chamber, NJ Ayuk, said natural gas was supporting the world to meet its climate targets faster and could help solve the world’s hunger crisis.
“Think about Europe, which is scrambling to line up enough oil, gas, and coal for the winter— and are looking to Africa for supplies – or consider the results of a 2022 Pew Research Survey of 10,237 U.S. adults about America’s energy transition. Only 31 per cent believed that the U.S. should phase out oil, gas, and coal completely, while 67 per cent called for cultivating a mix of fossil fuels and renewable energy sources.
“So, my question is, why should we in Africa give up our fossil fuels – fuels that represent solutions to some of our most pressing needs – when so many others question the wisdom of doing the same?” he asked.
Despite the arguments, Nigeria is still torn between accepting energy transition for which President Mohammadu Buhari pledged commitment to by the international community or to stick with its fellow OPEC-members struggle for energy mix.
President Buhari’s administration will wind up next year, and whether it is energy mix or transition will depend on the man at the helms of the affairs come 2060.
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