“Experts are unanimous that the increase in oil and gas production will play a critical role in the Nigerian economy’s recovery in 2021. Forecasts indicate that oil and gas production will continue to increase rapidly in the next two decades.”

“Nigeria’s current power generation is around 5,000 MW, while the ideal capacity would be around 30,000 MW. Nigeria plans to add six new coal plants by 2037. Together with 9 new additions of gas plants, this would provide an additional 11,163 MW of power.”

There have been reports that Nigeria, Africa’s biggest economy, is shifting away from oil and gas and is looking to invest in renewables. Recent energy decisions and investments show otherwise. The country is placing its bet on fossil fuels.

Fossil Fuels: Key to Nigeria’s Energy Future

Only 45 percent of Nigerians have access to the national power grid. Many among these face power outages on a regular basis. Around 20 million are estimated to be disconnected from the grid.

But for Nigeria and other fast-growing economies, the future remains uncertain as growing opposition to fossil fuel funding threatens their efforts to reduce poverty and secure energy for the future. Even the Africa Development Bank, a major funding source for infrastructure and energy projects in Africa, has announced that it will stop funding fossil-fuel projects.

This week, President Muhammadu Buhari of Nigeria warned the world that ending international funding for gas would create dire challenges for Nigeria and other African countries. Though in favor of a net-zero emission initiative, he explained why fossil fuel is still essential for fast-growing economies like Nigeria.

Moving Beyond Minor Hiccups: Oil Investment Continues

Nigeria is Africa’s largest oil exporter, and it is not ready to compromise on a sector that accounts for 90 percent of its foreign exchange revenue and 50 percent of all government revenue.

Despite the mainstream media chorus about Nigeria’s reducing reliance on oil, it continues to seek investment in oil and gas projects. The government is expected to pass the Petroleum Industry Bill in 2021, which will overhaul the oil industry and give producers more incentives. The bill will likely boost the production.

The country is also in talks with major oil firms to revive contracts and pave the way for more investments in the sector. The International Energy Agency‘s (IEA) investment-needs forecast for 2019–2040 reveals that the oil and gas sector requires anywhere between $342 to $390 billion dollars

The Nigerian Gas Association’s recently concluded 12th International Conference focused on the theme: “Powering Forward: Enabling Nigeria’s Industrialization Via Gas.” During the conference, it was understood that the Bank of Industry (Nigeria) now has “a $500 billion funding arrangement with the Bank of China (BOC) to finance import equipment for flare gas capture.”

To advance its oil and gas production, Nigeria aims to incorporate advanced technology like the Fibergrate Reinforced Plastic technology in its oil and gas production platforms. This will help cut production costs and yield higher profits, besides being more reliable.

Nigeria is also in its final stages of completing a large oil and gas park, a manufacturing hub that will produce equipment for the oil and gas industry. This will cut import costs. With a completion date of 2022, and the project is 70 percent complete.

Nigeria’s state oil company is on a mission to revive the Port Harcourt refinery, Nigeria’s biggest. It is believed that the state has secured lender’s approval for $1 billion, indicating the state’s commitment to propel oil and gas production in the coming decade. Commencement is expected to start soon, with the state awarding bids for engineering, procurement, and construction contracts.

Private producers are following a similar pattern of recovering defunct and underperforming oil blocks. Heirs Oil & Gas Ltd, an independent producer, has announced plans to restore a former Shell oil block. Once the process is complete, Heirs will be one of the country’s biggest operators. The company recently purchased an operating permit worth $1 billion.

Shell Nigeria Gas (SNG) has entered a 20-year agreement with Nigerian Gas Marketing Corporation to build gas infrastructure and expediate domestic distribution to manufacturing plants, industries, and commercial customers in the states of Ogun, Abia, Oyo, Rivers, Bayelsa, and Lagos.

Experts are unanimous that the increase in oil and gas production will play a critical role in the Nigerian economy’s recovery in 2021. Forecasts indicate that oil and gas production will continue to increase rapidly in the next two decades.

Coal Joins the Race to Meet Future Demand

Nigeria depends on gas for most of its electricity needs (80 percent). However, the country has been unable to meet growing demand. It is estimated that Nigeria lost 44,068 MW of electricity in 2020 due to a combination of gas shortages, a primitive transmission network, and other hurdles. To address this, Nigeria is adding nine new gas plants to its fleet.

But that alone is not sufficient. Nigeria’s current power generation is around 5,000 MW, while the ideal capacity would be around 30,000 MW.

Coal could meet the future electricity demand. The country holds 2 billion metric tons of coal in reserves. Geologists like Samuel Alabi, who are aware of this, have argued that coal is the best solution to address the country’s energy poverty.

In order to tap this abundant resource, Nigeria plans to add six new coal plants by 2037. Together with 9 new additions of gas plants, this would provide an additional 11,163 MW of power. Coal and gas will together contribute the highest percentage to country’s electricity generation between 2020 and 2040.

According to the International Energy Agency, demand for coal is set to rise rapidly, and the state’s production will not keep up with demand. Nevertheless, production will rise steeply in the next two decades.

However, to continue on this path of industrialization and development, Nigeria must resist the anti-fossil policies and interventions the West seeks to impose.

Commenting on the existential threat to Nigeria’s fossil ambitions, Nigeria’s former finance minister Kemi Adeosun said, “In Nigeria, we have coal but we have power problems, yet we’ve been blocked because it is not green. It is hypocrisy because we have the entire western industrialisation built on coal energy; that is the competitive advantage that they have been using.

Now, Africa wants to use coal and suddenly they are saying, ‘Oh, you have to use solar and wind (renewable energy)’, which are the most expensive, after polluting the environment for hundreds of years. Now that Africa wants to use coal, they deny us.”

If there is sufficient political will power, Nigeria will surge ahead and use its abundant oil, gas, and coal reserves in coming decades. The days of near complete electrification and higher revenues from the oil industry may not be far away.

This article was originally published on MasterResource.org.

Photo by Doug Linstedt on Unsplash.