Nigeria Earns $5bn From Gas Production Annually- FG
Nigeria earns around $5bn from gas production, Vice President Kashim Shettima has disclosed. The Vice President, who made the disclosure at the 6th Value-chain Annual Lecture and Awards on Thursday in Abuja, added that the amount is 40 per cent less than Egypt, whose gas reserves is 30 per cent of Nigeria’s gas reserves. Nigeria has about 208.83 trillion cubic feet of gas which represents 33 per cent of Africa’s total gas reserves of 620TCF. He said, “Our production to reserve ratio is less than a 3rd of Egypt’s, less than a quarter of Algeria’s and around 10 per cent of Malaysia. “In the aftermath of the Russia-Ukraine war, the EU and many other nations were shopping for LNG at the same time that Nigeria’s largest LNG assets were operating significantly below capacity because gas supply was inadequate. “At this rate, according to Decade of Gas analysis, we could have a demand-supply gap of up to 10bscfd of gas by 2030.” The Vice President, who was represented by Special Adviser to the President on Energy and Power Infrastructure, Office of the Vice President, Sodiq Wanka, said there is a dire need for the country to exploit its proven gas reserves to vastly enhance its fiscal position. With gas accounting for 80 per cent of power generation, authorities are focused on increasing gas utilization in the country as it seeks to make it a critical transition fuel as its 2060 net-zero target beckons. The number of industries that are gas-based and those that utilize gas for power are many, from fertilizer and methanol to cement and consumer goods. But the story of Nigeria’s gas riches and potential cannot be complete without understanding that we are far off from that potential and have a lot of work to do, as public sector leaders and as captains of industry. Shettima stressed that the government is working actively to resolve long standing liquidity issues in the power sector as it is set to roll out ambitious customer metering initiatives that would boost the sector. “We will continue to strengthen sector governance that favours only technically and financially sound investors to own key assets in the power sector. We will drive the implementation of the Electricity Act 2023 to create a new narrative and new national framework for electricity that will bring investment to the electricity sector. In terms of upstream gas, the commitment of the government on ensuring the right tariffs to encourage exploitation of non-associated gas remains strong,” he said. The Vice President noted that despite the enormous amount of work left to be done, the AKK pipeline projects are on course to be completed. “The Obigbo-Umuahia-Ajaokuta pipeline will be key to ensuring the AKK pipeline is not gas-constrained while opening up new demand along its right of way. There is much work left on expanding the ELPS network among others. These projects can be significantly accelerated if we focus on making investments in them more attractive. “Our network code must adequately cover private pipelines; we have to ensure that private investors are able to recover their costs and make a return on their investments by creating a new framework for tariffs that is not too rigid. And we need to have clear guidelines for tolling. The story is similar for other midstream infrastructure. On security of oil and gas assets, Dhettima said, the “government will also not rest in continuing to pursue a holistic approach to the issue of security of petroleum assets – from strengthening the operationalization of the Host Communities Trust Fund to closer community engagement, surveillance and prosecution of identified vandals. He urged the private sector to play a pivotal role by making the right investments in the sector. “Nigeria cannot be a net exporter of LPG and still import LPG for domestic use because of infrastructure gaps. Our private sector must strengthen its resolve to look beyond short-term challenges and make investments taking a long-term view,” he said.
Nigeria’s Underperforming In Oil, Gas Sector Due To Insecurity – Lokpobiri
Minister of State for Petroleum Resources (Oil), Mr Heineken Lokpobiri, has said that the challenge of insecurity in the Niger Delta was responsible for the underperformance of the petroleum sector. The Minister, who said this in a meeting with the Abuja Chapter of the Energy Correspondent Association Friday in Abuja, added that it was also affecting Nigeria’s oil production output. While noting that the issue was making it difficult for the country to meet its OPEC production quota, Lokpobiri said the government was working to address the drawback. He was hopeful that by the end of 2023, the country would increase its oil production to about 2 million barrels per day. Due to massive crude oil theft and pipeline vandalisation, Nigeria’s oil production presently hovers between 1.3-1.4 million barrels per day. “My sole agenda is to increase production. Once we increase production we will get more revenue for the country. You know Nigeria is still more dependent on oil. “Though the non-oil sector is also supporting the economy, a substantial part of our forex comes from oil. “The reason why we are underperforming is because of insecurity and we are gradually tackling those problems. “So, my ambition is to see how I can lead the sector to increase production so that we can get more revenue to deal with the fund and strategic rationale projects in the country. “I get the reports from relevant authorities. Today, we are doing about 1.4 million barrels of crude. So, we are steadily increasing but our target is to see how we can get to two million barrels,” he said. Lokpobiri urged the industry players to join hands together to find a permanent solution to the issue. He said the federal government was discussing with International Oil Companies and local producers to find a lasting solution to the insecurity challenge. He said the engagement was already yielding positive results. “We have identified where the problem is, and where we are getting the shortfall and we are already engaging them within the next few weeks, we will be able to give you how far we have gone in that direction. In an earlier remark, President of the association, Mr Victor Nnodim, assured the minister of the association’s readiness to partner with him as he sought to fulfill his agenda of ramping up crude oil production and delivering a better petroleum industry for the country. “We will support you to achieve your mandate,” he said.
Nigeria Lost $22.9bn To Gas Flares In 10 Years -NOSDRA
The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) is to part the Nigeria Upstream Regulatory Commission ( NUPRC) and Nigerian Oil Spill Detection and Response Agency (NOSDRA) to boost revenue generation through proper management of gas flares in line with global best practice. This is in a bid to arrest huge revenue losses recorded and enhance revenue generation into government coffers. According to RMAFC Public Relations Officer, Christian Nwachukwu, RMAFC Chairman Mohammed Bello Shehu disclosed this during an interactive forum with delegations from NUPRC and NOSDRA recently in Abuja. Bello noted that in view of the current government’s efforts to shore up the Nation’s revenue generation, the gas sector of the economy must be given adequate attention with NUPRC and NOSDRA as regulatory bodies in determining quality and quantities of gas production alongside adherence to environmental standards for host Communities. Responding, the Director of Economic Regulation and Strategic planning of NUPRC, Mr. Babajide Fashino noted that Nigeria is at the fore front of managing gas flares in line with global best practices for economic growth and sustainability. This is done with the introduction of a metering system and calibration of the meters for accurate records of gas management. According to Babajide, the introduction of such technologies has gone a long way in reducing gas flares gas flaring in Nigeria from 40 per cent to a mere 7 per cent. Earlier, the Director of ICT in NOSDRA, Mrs. Margaret Adeshida underscored the need for proper monetisation of gas flares in Nigeria, noting that Nigeria flared more than 4.2 billion standard cubic feet of gas leading to the country’s loss of more than $14.6 billion revenue between 2012 and 2021. This is in addition to $8.3 billion loss in penalty for the wastages. Mohammed Shehu therefore called on all the relevant stakeholders in the management of the gas economy including the revenue monitoring Committee of the present administration to salvage the Country by coming together to work out proper strategies to convert the gas flare to economic use for enhancing revenue generation into the Federation Account.
DisCos raked in N247.33bn revenue in Q1 2023 -NBS
Data from the National Bureau of Statistics (NBS) has revealed that there was a slight increase in the number of total number of customers in the second quarter of 2023 with the number moving to 11.47 million from 11.27 million in the first quarter of 2023, indicting a 1.84 per cent increase. In its Nigeria Electricity Report Q2 2023: Energy Billed, Revenue Generated and Customers By DISCOS, the bureau stated that on a year-on-year basis, customer numbers in Q2 2023 rose by 6.17% from 10.81 million reported in Q2 2022. Similarly, metered customers stood at 5.47 million in Q2 2023, indicating a growth of 3.10% from 5.31 million recorded in the preceding quarter. “On a year-on-year basis, this grew by 10.40% from the figure reported in Q2 2022 which was 4.96 million. In addition, estimated customers during the quarter were 6.00 million, higher by 0.72% from 5.96 million in Q1 2023. “On a year-on-year basis, estimated customers increased by 2.58% in Q2 2023 from 5.85 million in Q2 2022,” it said. The coordinating agency for all statistics in Nigeria added that revenue collected by the DISCOs in Q2 was N263.08 billion from N247.33 billion in Q1 2023. “On a year-on-year basis, revenue generated in the reference period rose by 39.63% from N188.41 billion recorded in Q2 2022. “Electricity supply was 5,909.83 (Gwh) in Q2 2023 from 5,851.87 (Gwh) in the previous quarter. However, on a year-on-year basis, electricity supply increased by 13.06% compared to 5,226.97 (Gwh) reported in Q2 2022,” it said.
Oando Plc agrees ENI acquisition of Nigerian Agip Oil shares
Oando Plc, (Oando), has announced an agreement with ENI for the acquisition of 100 per cent of the shares of Nigerian Agip Oil Company Limited (NAOC Ltd). The company which is listed on both the Nigerian Exchange Limited and Johannesburg Stock Exchange, is pleased to announce that the Completion of the transaction is subject to Ministerial Consent and other required regulatory approvals. The transaction is set to increase Oando’s current participating interests in OMLs 60, 61, 62, and 63 from 20 per cent to 40 per cent. Oando in a statement said that the arrangements will increases Oando’s ownership stake in all NEPL/NAOC/OOL Joint Venture assets and infrastructure which include 40 discovered oil and gas fields, of which twenty four are currently producing, approximately forty identified prospects and leads, twelve production stations, approximately 1,490 km of pipelines, three gas processing plants, the Brass River Oil Terminal, the Kwale-Okpai phases 1 & 2 power plants (with a total nameplate capacity of 960MW), and associated infrastructure. It said based on 2021 reserves estimates, Oando’s total reserves stand at 503.3MMboe and the transaction will deliver a 98 per cent increase. The transaction also grows Oando’s exploration asset portfolio through the acquisition of a 90 per cent interest in OPL 282 and 48 per cent interest in OPL 135. A Statement from the company said NAOC Ltd participating interest in SPDC JV like Shell Production Development Company Joint Venture – operator Shell 30 per cent TotalEnergies 10 per cent, NAOC 5 per cent, NNPC 55 per cent is not included in the perimeter of the transaction and will be retained in Eni’s portfolio. Commenting Wale Tinubu CON, Group Chief Executive, Oando PLC said: “The synergies created by this acquisition will unlock unparalleled opportunities for us to realign expectations, enhance efficiency, optimize resource allocation, and significantly increase production. Furthermore, it is in alignment with our strategy of acquiring, enhancing, appraising, and efficiently developing reserves. Today’s announcement is not just an important milestone for the future of Oando; it brings to bear the important role indigenous actors will play in the future of the Nigerian upstream sector. Having achieved this significant milestone, we look forward to closing the transaction and harnessing the full potential of the enhanced platform to accrue value for our local communities, stakeholders and shareholders.”
Crude production plunges to 1.22mbpd in Q2 2023 -Report
Hope for increased crude oil production deemed with second quarter figures plunging to 1.22 million barrel per day (mbpd), Nigeria’s statistics bureau, has said. The decrease is coming in spite of the restoration of fragile peace in the Nigeria Delta region; the second quarter of 2023 recorded an average daily oil production of 1.22 million barrels per day (mbpd). This according to the Nigerian Bureau of Statistics (NBS) was much lower than the daily average production of 1.43mbpd recorded in the same quarter of 2022 by 0.22mbpd and lower than the first quarter of 2023 production volume of 1.51 mbpd by 0.29mbpd. The real growth of the oil sector was 13.43 per cent (year-on-year) in the second quarter of 2023, indicating a decrease of 1.66 per cent points relative to the rate recorded in the corresponding quarter of 2022 (-11.77 per cent). Growth also decreased by 9.22 per cent points when compared to the first quarter of 2023 which was –4.21 per cent. On a quarter-on-quarter basis, the oil sector recorded a growth rate of -14.12 per cent in the second quarter of 2023 and contributed 5.34 per cent to the total real Gross Domestic Product (GDP) in the second quarter of 2023, down from the figure recorded in the corresponding period of 2022 and down from the preceding quarter, where it contributed 6.33 per cent and 6.21 per cent respectively. The statistics bureau further said the non-oil sector grew by 3.58 per cent in real terms during the reference quarter (Q2 2023). This rate was lower by 1.19 per cent points compared to the rate recorded in the same quarter of 2022 and 0.81 per cent.
Fossil fuel subsidies surge to record $7trn
The International Monetary Fund (IMF) has said that subsidies on fossil fuel surged to a record $7 trillion in 2022. The Fund in its chart of the week, which focused on climate change, said the impact of the Russia-Ukraine war as governments globally supported consumers and businesses as energy prices spiked. As the world struggles to restrict global warming to 1.5 degrees Celsius and parts of Asia, Europe and the United States swelter in extreme heat, subsidies for oil, coal and natural gas are costing the equivalent of 7.1 percent of global gross domestic product. The World Meteorological Organization says July was the hottest month on record. Data shows that fossil-fuel subsidies rose by $2 trillion over the past two years as explicit subsidies (undercharging for supply costs) more than doubled to $1.3 trillion. Consuming fossil fuels imposes enormous environmental costs—mostly from local air pollution and damage from global warming. The vast majority of subsidies are implicit, as environmental costs are often not reflected in prices for fossil fuels, especially for coal and diesel. “If governments removed explicit subsidies and imposed corrective taxes, fuel prices would increase. This would lead firms and households to consider environmental costs when making consumption and investment decisions. The result would be cutting global carbon-dioxide emissions significantly, cleaner air, less lung and heart disease, and more fiscal space for governments. “We estimate that scrapping explicit and implicit fossil-fuel subsidies would prevent 1.6 million premature deaths annually, raise government revenues by $4.4 trillion, and put emissions on track toward reaching global warming targets. It would also redistribute income as fuel subsidies benefit rich households more than poor ones. “Yet removing fuel subsidies can be tricky. Governments must design, communicate, and implement reforms clearly and carefully as part of a comprehensive policy package that underscores the benefits. A portion of the increased revenues should be used to compensate vulnerable households for higher energy prices. The remainder could be used to cut taxes on work and investment and fund public goods such as education, healthcare, and clean energy,” the global lender said.
NLNG sustaining gas exports, local supplies amid Force Majeure challenges -Odeh
Amidst reports of Force Majeure, the Nigeria Liquified Natural Gas (NLNG) has emphatically confirmed the uninterrupted flow of sustainable gas exports and local supplies from its Rivers State facility. This confirmation directly refutes recent news articles that suggested otherwise. Andy Odeh, the General Manager of External Relations and Sustainable Development at NLNG, labeled the aforementioned reports as both false and misleading. Odeh clarified that the NLNG’s operational activities on Bonny Island remain active, despite the prevailing Force Majeure. He added that the NLNG’s cargo loading operation also continues without interruption. “The latest cargo from the Bonny plant sailed on 17th August 2023 to the St. Croix, U.S. Virgin Islands, carrying 140,000 M3 of LNG,” Odeh said. He said the NLNG remains committed to collaborating with key stakeholders to minimise the impact of the consequent gas supply shortage. The declaration of Force Majeure came as a result of the disruption in the availability of major liquids evacuation pipelines caused by acts of sabotage and vandalism by unidentified parties. In spite of this setback, the NLNG facility steadfastly continues the production of both Liquified Natural Gas (LNG) and Liquified Petroleum Gas (LPG). These outputs are proportionate to the volume of feed gas received from their upstream gas suppliers. This concerted effort caters to the demands of the domestic market. In the face of the ongoing gas supply shortage brought about by the disruptions in upstream gas supply chains, Odeh reiterated the NLNG’s unwavering commitment to collaborating closely with key stakeholders. This collaborative approach aims to mitigate the adverse impacts stemming from the gas supply shortage. Ultimately, NLNG’s confirmation of the continuous gas export and local supply operations serves as a reassurance to stakeholders and the general public alike. Despite challenges, the NLNG remains steadfast in its commitment to maintaining a stable supply of gas and fostering effective collaboration to navigate these complex circumstances.
‘European refiners groan as Nigeria’s subsidy removal bites harder’
Petrol subsidy removal by the Bola Tinubu administration is impacting European refiners negatively as demand for the product has reduced by more than 50 per cent, S&P Global Commodities at Sea has said. Imports of petrol to Nigeria plummeted to 106,000 barrels per day, b/d in July from 205,200 b/d in May, according to data from S&P Global Commodities at Sea, after local petrol prices skyrocketed. Total refined product demand has fallen 41 per cent in the same period, the data showed. Scrapping the long-standing subsidy could save Nigeria as much as Naira 11 trillion ($2.6 billion) in 2023, according to estimates from the World Bank in June, providing relief to a growing government deficit. Sinking Nigerian demand, driven by high fuel prices, has also led to a drop-off in demand for European exports, whose refiners had relied on thirsty West African markets. “There is zero demand [in West Africa] at the moment,” a source in the region said. Another European market source said: “Considering the [Nigerian] subsidy removal … demand is indeed depressed.” The 91 RON FOB AR WAF discount to FOB AR gasoline cargoes was $89/mt on August 10, down sharply from before the subsidy was taken away. On May 22, the spread was at a premium of $50.25/mt, but by the end of the month had fallen to a discount. The subsidy removal has shaken up longstanding arbitrage for European refiners. While Nigerian demand in particular has diminished, other destinations have picked up the slack. The US Atlantic Coast made up 28 per cent of total petrol exported from the Amsterdam-Rotterdam-Antwerp region in July amid persistently low stocks, according to Kpler shipping data, increasing its share from the low teens almost in tandem with the shrinking Nigerian demand. As a result, European refiners have been unfazed by sinking demand in West Africa. “The arb is strong. Octanes are tight, so petrol remains well supported” a trader in Europe said. European traders already faced being crowded out by Russian refined products that have flooded into Africa — including Nigeria — since the onset of the war in Ukraine saw European countries boycott Russian oil products. Yet even Russian exports to Nigeria have fallen sharply since the fuel subsidy was scrapped. Nigeria is Africa’s largest oil producer, with an output of 1.32 million b/d last month according to the Platts OPEC Survey from S&P Global, but a lack of refining capacity means the country is forced to import refined products. One potential solution is the long-awaited Dangote refinery inaugurated by former president Muhammadu Buhari in April. The mega project, built by Aliko Dangote, is designed to make Nigeria self-sufficient in fuels, soften the gasoline market, and even to supply countries across Africa and beyond. According to estimates from S&P Global, Nigerian gasoline production could overtake imports in 2025 and exceed them until the 2040s, if the refinery can get up and running.
Global gas flaring detrimental to health, environment, IEA warns
The International Energy Agency (IEA) has issued a stark warning about the harmful effects of worldwide gas flaring, which releases approximately 140 billion cubic meters (bcm) of natural gas annually. This process contributes significantly to CO2 emissions, methane, and black soot, posing severe health and environmental risks. In its report titled ‘Tracking Flaring Emissions,’ the IEA highlighted a slight reduction in global gas flaring volume for 2022, down by about 5 billion cubic meters (bcm) to 139 bcm, marking a roughly 3% decrease. Surprisingly, the volumes of natural gas flared in 2022 were comparable to levels observed in 2010. The report underscored that gas flaring led to the emission of approximately 500 million tonnes of CO2 equivalent in greenhouse gases during 2022. Moreover, nearly 70% of flared gas is directed to flares that operate almost continuously. In the context of the Net Zero Emissions by 2050 (NZE) Scenario, the IEA projected that all non-emergency flaring would be eradicated globally by 2030. This ambitious target would result in a remarkable 95% reduction in flared volumes, thereby preventing the release of 365 million tonnes of CO2-equivalent emissions. The IEA emphasized the dire consequences of non-emergency flaring and venting, processes that are even more environmentally damaging than flaring. These practices occur when operators opt to burn associated gas continually or semi-permanently during production or release it into the atmosphere. The IEA estimated that the average global combustion efficiency, considering both active and extinguished flares, is roughly 92%, leading to the substantial release of potent greenhouse gases like methane, black soot, and nitrous oxide into the atmosphere. Highlighting potential solutions, the report indicated that oil producers possess a range of readily available options to reduce and eliminate flaring. Additionally, various new technologies are under development to address this pressing concern.