Global natural gas rebound puts Nigeria on edge  

 

Editorial

 

The International Energy Agency (IEA), in its latest report on global gas demand, said the commodity will remain in high demand beyond earlier plans by climate advocates to scale back its production.

Concerted efforts on climate change mitigation have set a 2050 target to transition by the global economy to renewable sources of energy. This is in spite of strong advocacy by hydrocarbon-dependent countries such as Nigeria and other major oil producers for soft landing alternatives, particularly natural gas as its transition fuel.

The unfortunate conflict between Russia and Ukraine may have accelerated a major setback and disrupted the climate change timetable, thus rekindling investment appetite for gas production in countries such as Nigeria.

Interestingly, the IEA further said that the current spike in gas demand is the consequence of the natural gas crisis and may not be associated with climate change contradictions.

However, it is now obvious that proponents of energy transition, who have been very loud in asking oil rich developing countries to bend or break, are the quickest in demanding a temporary reversal, in a volt face to save their skins.

 In actual fact, at the just concluded  2022 Global Energy Forum held under the aegis  of the government of United Arab Emirate,  the consensus of opinion agreed that there is a shift from these countries in terms of their strategies and policies, where previously fossil fuel-based energy was a—no topic of discussion.

Some of the keynote speakers at the Forum said, “Today, all of a sudden, it is right in the mix of things. Today, we see some of these countries actually reverting  to coal. Today, we see some of these countries actually subsidizing fuel for their citizens.

“So this just proves one point, which is, that oil and gas will remain as part of the overall energy mix. Investments must continue in the oil and gas front”

Malam Sanusi Barkindo, Secretary General of Organization of the Petroleum Exporting Countries(OPEC) said that “What is required at the moment is to revisit how we explore, we produce, we refine, and distribute and consume hydrocarbons to bring them in line with current realities, especially in terms of sustainability.

Global demand, therefore , for Nigeria’s gas is on the upward swing with European buyers jostling for a medium term production agenda in order to offset Russia’s dominant position as a prime supplier to the Eastern European markets.

The recent visit of the European Union to Nigeria for partnership on natural gas is one of such moves to rejig the demand and a major set back to energy transition advocacy.

All things being equal, Nigeria stands at the threshold of a major energy transition, a  trajectory that could put gas production ahead of crude oil as the country’s cash cow.

Unfortunately, all things are not equal because we don’t have the gas above-ground for the buyers and EnergyDay is worried .

Policy framework for gas production is still lacking. The Petroleum Industry Act(PIA) recently passed and accented by the Federal Government is undergoing a snail-paced implementation road-map, and key industry players and host communities are not yet fully brought into the picture to stimulate investments.

In the face of this and the opportunities of windfall dangling before us,  EnergyDay holds the view that Nigerians should be more confident in investing in their country and economy, and PIA Business Dialogues should now commence across the country by stakeholders, particularly host communities.

Rystad Energy Consulting in breaking down the spending expenditures in 2022 reveals that it is still upstream that dominates the energy landscape with USD 658 billion of spending, representing 16% growth over the preceding year.

Gas, including LNG, is expected to attain a 15% growth rate or output capacity expansion to 396 MMcfd. This scenario puts Nigeria ahead of other countries in Sub-Saharan Africa, according to Rystad, as a top destination for investors. Going forward, the process of taking advantage of this golden moment is the responsibility of the private sector players.

Right now, the country is on edge, facing a once-in-a-lifetime opportunity to lead an African gas revolution but hampered by an uncoordinated system, a hangover from resource control agitations, and a lack of visionary leadership to move forward.

In the last two weeks, several overtures have been made to Nigeria by Europe in a bid to use the country as a buffer against the impending global energy crisis. It is still not very clear, how the Nigerian government will proceed in terms of the commercial arrangements and the extended impact on the host community benefits.

It is sufficient, though, to focus on how Nigeria may secure 7% of the projected USD 658 billion of budgeted global spend, as predicted by Rystad in its current report.

EnergyDay calls on all industry leaders to adopt the principle of “co-operation in a competitive” environment as a strong strategy for a win-win outcome for the country.

Leave a Reply

Your email address will not be published.