The Federal Government plans to achieve net zero by 2060 but the journey to this destination seems bumpy as it requires huge revenue to diversify to renewables. OPEOLUWANI AKINTAYO writes on the renewed interest of International Oil Companies in the Nigerian oil sector as govt drive its clean energy agenda
Although the Federal Government has reiterated its commitment to meeting its pledge to the United Nations Net Zero by 2060, the country has continued to open its doors to more oil and gas investors.
The country has continued to intensify oil exploration, making more oil and gas field discoveries, including flagging off more bid rounds.
In 2020, FG stated that it had chosen gas as its transitional fuel, however, on the sideline, it tries to drag along a renewable plan currently gaining less attention than the international communities had expected.
For instance, the government made a case for the mini-bid rounds flagged off by the Nigerian Upstream Petroleum Regulatory Commission, not too long after the COP27.
Chief Executive Officer, NUPRC, Gbenga Komolafe, had said recent events around the globe indicated that fossil fuels would continue to be a core part of the global energy mix well into the future, even beyond the 2050 targets for achieving net-zero carbon emissions that have been set by most countries.
The recent increase in the price of energy, mostly occasioned by the conflict between Russia and Ukraine and the ensuing energy disruption, had reawakened the call for geopolitical energy security and sustainability.
Countries that had earlier signed up for the net zero, have also found themselves latching onto various energy sources including coal, oil and gas to bridge the deficit energy gaps.
This month, as part of its efforts to reduce carbon emissions, the government said it had penned down 139 oil and gas firms for gas commercialisation. The gas commercialisation was aimed at cutting 15 million tonnes of carbon emissions from the atmosphere.
The NUPRC had also identified 213 gas blocks, which it said were open for investments.
According to a document seen by The PUNCH, 69 blocks were discovered in the Niger Delta basin, 12 in Anambra, 41 in Benue Trough, 17 in Bida, 40 in Chad, 6 in Dahomey, and 28 in Sokoto.
Already, the country has 60 gas basins under the Oil Prospecting Licenses- 44 in the Niger Delta, 5 in Anambra, two in Benue Trough, six in Chad, and three in Dahomey.
There are also 115 gas wells already allocated under Oil Mining Licenses OMLs- 112 in the Niger Delta, two in Anambra, and one in Dahomey.
Again, the FG this week listed seven oil blocks in the ongoing mini 2022/2023 bid rounds.
Findings by The PUNCH show that the oil blocks are in the western Niger Delta region, near the Aje, Bosi and Ogo discoveries.
The seven deep offshore open blocks that cover an area of approximately 6,700km2 in-water depths of 1,150m to 3,100m are on offer in the mini bid round and are the first in a series of bid rounds aimed at further development of Nigeria’s prospective petroleum basins.
“The seven deep offshore blocks have been thoroughly evaluated and are believed to have significant potential for hydrocarbon reserves. They are in some of the most promising areas of the deep waters of Nigeria which have been de-risked by other producing fields nearby,” Minister for States Petroleum Resources, Timipre Sylva, said at the pre-bid conference organised by the NUPRC in Lagos.
“The bid rounds are within the context of our enhanced legal and regulatory frameworks, as enshrined in Section 73 of the PIA, that seeks to encourage new investors and investments into the next phase of oil and gas exploration in Nigeria,” he said, adding that it was a market-driven programme expected to outperform the last bid round which held in April 2007, during which a total of 45 blocks were put on offer under a different regulatory regime (the Petroleum Act, 1969).
The mini-bid rounds come on the heels of the recently concluded ground-breaking ceremony of the Kolmani Oil Prospecting Licenses 809 and 810.
The PUNCH gathered that rounds are expected to come to a close on May 2, and the process is expected to contain registration and pre-qualification, data prying/purchase, technical bid submission/presentation, technical bid evaluation, and the commercial bid conference.
Komolafe assured that bid rounds regulations would be fair, transparent, and competitive in line with best practices.
“In addition, the mini bid round presents us with the opportunity to reinforce Nigeria’s commitment to openness and transparency in line with the principles of the Extractive Industry Transparency Initiative,” he said.
On the global scale, Komolafe said the licensing round would no doubt be gainful to all stakeholders, and would in the long run contribute to long-term global energy sufficiency.
Interestingly, he said the licensing round process was formulated in cognisance of global sustainability goals, adding that the process would, in addition to technical and commercial considerations, pay the requisite attention to strategies, processes and implementable plans consistent with net zero carbon emission targets, eliminating gas flares, as well as overall environmental, social and governance considerations.
“The oil and gas industry in Nigeria has embraced the reality of energy transition and is taking a strategic position to leverage on the opportunities presented,” he stated.
Although the Federal Government has pledged to pursue the net zero agenda, the N4tn it requires to drive the 10-year gas expansion plan poses a huge challenge. FG also claimed needs a total of N834tn to attain net zero by 2060.
Reacting to this, Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said, “That is a tall one. Where will the money come from? That target is ambitious and aspirational but again, because we are looking at a long-term thing; we must not totally dismiss it. With what is happening globally; you can see that the pace of decarbonisation has slowed. Countries that are committed to a more aggressive push are going back to fossil fuels- looking for coal.
“I am not optimistic that raising such an amount will be easy. Then the commitment to the COP is also not too impressive and very weak. And if commitment is this low, how do you convince investors either in form of aid or whatever to invest this kind of huge money? It is going to be a tall order.”
Independent Researcher & Development Practitioner/Consultant, and Consultant in the oil and gas sector, Dr Dauda Garuba, said the proper management of revenue from its natural resources should be the topmost concern for the country rather than discoveries of wells which at the end of the day, might end up being stolen after exploration.
“Gas is touted as the transition mineral. Nigeria is richer in gas than oil. I see much more to be discovered. However, we should be more concerned about the management of earnings from this,” he said.
On his part, professor of economics at Olabisi Onabanjo University, Sheriffdeen Tella lauded the Federal Government’s plan to reach net zero by 2060.
“It is good to work towards zero gas emissions. The given figure is an estimate over time and must have been based on expert advice,” he told The PUNCH.
