Apart from Nigeria’s rich hydrocarbon potentials, Nigeria is blessed with potentials for blue energy, solar, wind, biomass as well as other sources of renewable energy to leverage for right energy mix in the energy transition regime, says Gbenga Komolafe, Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
According to Komolafe, Nigeria is also suitably positioned to become a superpower in the unfolding energy transition regime because of its abundant energy sources, to achieve the right energy mix for sustainability of energy supply.
The NUPRC boss made the declaration in Abuja in a keynote address presented at the Nigerian International Energy Summit (NIES) in Abuja, on Thursday, April 20, 2023. on the topic “Pivoting Upstream Petroleum Regulations and Investments.”
He however lamented that “in the years preceding the enactment of the Petroleum Industry Act (2021), investments in the Nigerian oil and gas industry declined due to regulatory uncertainty in addition to de-funding of fossil fuel development occasioned by energy transition and COVID-19.
“Most of the IOCs deprioritized Nigeria in their portfolios leading to the redirection of CAPEX to other countries and the attendant dwindling investment in Nigeria’s upstream sector.
“For instance, Nigeria’s total annual upstream capital expenditure decreased by 74% from $27 billion in the year 2014 to less than $6 billion in 2022. More so, increasing competition from regional peers has led to decrease in the proportion of the overall upstream investment attracted by Nigeria.”
But Komolafe said Nigeria boasted of 37.064 billion barrels of oil with a daily production of over 1.5 million barrels of oil and that in terms of reserves, Nigeria ranked second in Africa, 8th in OPEC and 11th in the World.
“She ranks 1st in Africa, 6th in OPEC and 15th in the World in terms of crude oil production. The GDP per capita for Nigeria stands at $1,998 which ranks her at 12th position amongst the OPEC member states and 22nd in Africa. Although crude oil contributes over 85% to Nigeria’s foreign exchange earnings, its contribution to GDP is about 6.33%, while Algeria’s is 10.2%, Angola is 30% and Libya at over 50%. The Commission Chief Executive (CCE), stated that Nigeria is a nation where needs meet opportunity.
“This under-investment is also reflected in the country rig count. On average, Nigeria had 17 active oil rigs in 2019 representing one of the highest counts on the African continent as at then. Nigeria’s average rig count declined to 11 in 2020, 7 in 2021, 10 in 2022, but recently grew to 24 in April 2023, a positive signal of new investments trickling into the country. This is also a reflection of investors’ acceptance of effective implementation of the PIA by the regulator.
“In contrast, other OPEC member countries such as Iran, Iraq, Algeria, Libya, Angola had 117, 62, 31, 12 and 9 active rigs respectively as of February 2023 as against Nigeria’s rig count which stood at 13. However, following two years of high energy prices, the global oil and gas industry is experiencing a boom that could be directed to capital investment in upstream. The projected outlook over the next few years is positive, and as an industry we need to leverage on this opportunity by doing all that is necessary to attract more investments and revive the Nigerian upstream sector.
“As opposed to the defunding of fossil fuel projects, global investments in energy R&D and innovations in renewables and clean energy technologies are increasing, even at the peak of Covid-19 pandemic as governments race to stay on track with Net Zero Emissions by 2050. From 2021 to 2022, the annual global investments in clean energy sources and technology specifically relevant to the energy transition increased by 31 percent representing the largest annual investment increase since 2010.”
He said there was the need for Nigeria to look inwards and see how it could adopt alternative measures to boost its energy supply. “The need for Oil and Gas producers in Africa to embrace the reality of green transition and take strategic position to leverage on the opportunities presented by the unfolding era has indeed become more pressing”, he said, adding that “energy transition plans have also been derailed by the unprecedented global energy crisis provoked by the Russia-Ukraine war as reiterated by the G7 Ministers of Climate, Energy and the Environment.
“It is therefore incumbent on us as industry stakeholders to embrace climate action initiatives targeted at emissions reduction while ensuring that opportunities arising from increasing demand for credit in the Voluntary Carbon Markets do not elude us.”
He said his commission had already taken some steps in this direction. He said: “The NUPRC has embarked on development of a regulatory framework for carbon-pricing system to make businesses pay for their emissions and incentivize emission reductions through carbon credits.
“The commission has risen to the occasion by establishing a new Department, “Energy Transition & Carbon Monetization”, saddled with the regulation of the oil and gas carbon market and we will soon revert to the industry on proposed actions and measures in this regard.”