African Countries In Perspective: Nigeria

Elaborated by Author Source: Business Monitor International

Nigeria ranks sixth-largest producer of oil in the world and number one largest producer in Africa. It is pertinent to state that Nigeria has greater potential for gas than oil as her rank fluctuates between seventh and ninth in the world. Knowing that natural gas has a strategic advantage over other fossil fuels in the sector of power generation, this is an advantage that Nigeria is yet to fully tap into, a lot can still be done to properly utilize these resources.

Just like coal, natural gas can provide a steady supply to urban and industrial areas but crucially, gas-fired plants are also a better fit for variable renewable energies, thanks to their higher operational flexibility and lower capital cost. With the deployment of the huge renewable energy potential in Africa, most of which is variable and not dispatchable (like solar and wind), there will be a need for dispatchable power plants which will operate in mid-load: it is here that gas has an advantage over coal (Gonzalez-Salazar et al. 2018).

In terms of revenue, according to statistics released by the Nigerian National Bureau of Statistics (NBS), in 2017 the oil and gas industry in Nigeria accounted for approximately 70% of government revenue and more than 90% of its export earnings. The contribution of the oil and gas industry to Nigeria’s gross domestic product was approximately 10% by end of the third quarter of 2017.

It is also important to note that, natural gas is the cleanest among fossil fuels. Although greenhouse gas emissions from the industry are not negligible, the potential to abate them is quite high and reasonably cheap to realize. However, the real environmental advantage of using gas is the cleanliness on the user side: less air pollution, reduced risk of land and water contamination.

Currently, Nigeria reigns supreme in the deposit of bitumen specifically in Ondo state, the South-Western part of the country. The energy industry is currently facing a paradigm shift towards heavy oil recovery and production as conventional light oil resources are continuously depleted. This enormous deposit is an untapped resource and can contribute greatly to the future of hydrocarbon exploration in the country. However, venturing into these prospects requires high technical knowledge and this can be achieved by conducting training programs to increase the capacity of indigenous Nigerian firms to provide these services are likely to be highly successful.

However, the country also faces a problem that has long time posed as a threat to oil and gas production; refining. The current inefficient refining capacity of the country even though, there exist four refineries whose combined refining capacity is approximately 445,000 barrels per day according to the Nigeria Extractive Industries Transparency Initiative, NEITI, oil and gas report 2015, contributes largely to the problem of not meeting demands. But there is a silver lining, a private company – Dangote group is currently building a huge refinery to cushion this problem. In June 2018, the Independent Petroleum Marketers Association of Nigeria (IPMAN) said that the Dangote Refinery, Petrochemical, and Fertilizer projects would solve the country’s crude oil refining and exporting challenges when completed. The refinery is said to have the capacity of refining 650, 000 barrels per day and this is expected to have a great multiplier effect on the nation’s economy when completed. It is in the Lekki Free Trade Zone in Lagos State and is scheduled to come on stream by 2019, and the refining capacity is expected to increase to 90 percent by 2030. A recent PwC report suggests that by the end-2019 Nigeria could assume the status of the largest producer of refined petroleum products in Africa. The projection sees Nigerian exports exceed 300,000 BPD by 2019 – up 350% from 2016 production of 65,000 BPD.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button