April 16, 2024

Nigeria needs to urgently address energy poverty to catch up with the rest of the world – Mshelbila, MD NLNG

 

Oredola Adeola

Philip Mshelbila, Managing Director of Nigeria LNG said that there is an urgent need for Nigeria to address its energy poverty amidst a growing youth population, emphasising that the country must speedily catch up as the rest of the world has moved.

Mshelbila made this observation during a panel session at the Decade of Gas/ 13th International Gas Day, with the theme “Ensuring the Realisation of Nigeria’s Decade of Gas”, organised by the Nigeria Gas Association (NGA) on the sideline of the just concluded Nigeria International Energy Summit 2023 (NIES) in Abuja.

Excepts

NIGERIA A NATION OF PARADOXES

Nigeria is a nation of paradoxes. For example, we produce so much crude oil but import the finished petroleum products. Rather than fix the problem fundamentally, we went ahead to build the biggest refinery in the world.

We have no power, again, rather than fix the problem. We all go out and buy generators to power our homes, offices and establishment. We do not have water flowing in our taps, instead of fixing it, we drill our separate boreholes.

We do not have liquified natural gas for our domestic market for various reasons including insecurity in the Niger Delta and associated host community issues.

Simply because the Nigeria LNG is working, I have been approached to divert the LNG originally meant for export back into the domestic market from where the natural gas was sourced.

We don’t have enough liquefied petroleum gas (LPG) to service international customers. The LPG from NLNG was destined for export so that we can generate revenue from it, while the various indigenous producers would have focused on producing the LPG needed within the country.

Since that is not happening, NLNG had to supply 100 percent of its LPG production — propane and butane — to the Nigerian market, in order to increase LPG availability in Nigeria, and support the Federal Government’s Decade of the Gas initiative.

We have a serious problem, we never learnt how to tackle things head-on. We leave the problem to grow to become cancer, and we then find ways around it. When are we going to stop displaying this attitude?

WHAT NEEDED TO BE DONE URGENTLY?

The urgency for me is the need for us to address the growing impact of energy poverty in Nigeria. Many of us have the luxury of Air Conditioning (AC) and industrial generators with backup inverters and alternative power systems.

But we don’t really appreciate the level of energy poverty in this country.  I usually visit my village once in a while and always feel sad by the spate of energy poverty. There is an urgency for us to do something quickly about this scourge because the rest of the world is moving on with development.

This has become critical because our population is growing astronomically. There is an urgency to address the challenge posed by the growing number of the youth population in our total demography. This must be tackled head-on, or we continue to sit on gunpowder waiting to explode.

ENERGY TRANSITION

The second reason is the energy transition. We have the opportunity to take charge and plot the issues out. If we don’t do something now, the solution will be dictated to us by the developed countries.

 

We need to plot out how we are going to manage our energy transition in a manner that is peculiar to our traditional needs. We have to develop our own form of energy transition. This has to be planned and executed by us, deployment of our technical competence and human resources.

NATURAL GAS PRODUCTION DECLINE

In the last two years, global gas and LNG markets have experienced a seismic shift as a result of Covid 19 pandemic and Russia’s invasion of Ukraine. NLNG export has gotten worse and continues to decline to date.

Global demand has grown to a record high that we have never seen before. Prices in August 2022, the peak of $70.50 per million British thermal units (mmBtu) in record history.  This was a period when Nigeria recorded the lowest gas supply in ever. So we could not play favourably well in the gas price boom.

Coming out of that, gas contracts are now being signed with the US and Qatar in particular, and a few other countries.

Note that LNG contracts are long-term contracts. The biggest demand markets are signing 15 to 20 years contracts. While these big deals are being signed, Nigeria LNG’s production status is under force majeure.

This means that NLNG cannot meet its obligations to existing customers and cannot sign up for new deals.

 

That is where we are. There is the urgency to address this.

WHAT IS THE REMEDY – SHORT, MEDIUM AND LONG TERMS?

In the short or immediate term, we have to fix the insecurity issue affecting production and evacuation of products from the fields to the export terminals. If we don’t fix it now, then will become one of the paradoxes. We would then have to leave the insecurity situation as it is now and later look for ways around it.

Fixing insecurity in the Niger Delta and other production corridors will immediately unlock at least 30 or 40 percent of the gap that we have in NLNG. This will also unlock a lot of natural gas into the facilities of other indigenous gas producers in the country.

There is huge production decline across the country. A lot of fields and reservoirs are going into decline, and the impact is seen in our output level.

This is why we are seeing all sorts of water and all kinds of things on the receiving end. Most of the producers have projects that they have due to return. The majority of these projects are either delayed or abandoned for several reasons. These are all above-the-ground challenges that needed to be addressed.

 

 

The decade of gas will play a critical role in the long term. We have talked about unlocking the non-associated gas. We need some forms of policies that are above the purview of the Petroleum Industry Act(PIA) to address dry gas.

We can catch up with Countries that are doing amazing things in the oil sector using the Decade of Gas.

We need a long-term policy action plan that will particularly address issues facing offshore dry gas. The PIA does not provide enough for this.

So there has to be some form of policy to deal with that and this can be achieved with plans like the Decade of Gas programme. We have huge reserves of gas in the deep water that we have not been fully tapped.

The Nigeria LNG can deliver train 7 if everything goes on well with the gas supply to our trains. However, we cannot deliver train 8 and beyond, if we continue to struggle with the production of gas in the deep water.