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China-Africa Trade Information Service
info.afrindex.com
China-Africa Trade Information Service
Nigeria, black Africa’s largest economy, has an Achilles heel – energy. Accordingly, any and all energy sources, from coal to renewables, are on the table.Nigeria has only small deposits of conventional oil and natural gas and accordingly uses its vast coal deposits for the majority of its energy needs, particularly in generating electricity.
Most of Nigeria's oil imports are used primarily in the country's transportation sector and imported from the Middle Eastern and West African producers before being locally refined. Nigeria also has a highly developed synthetic fuels industry, producing gasoline and diesel fuels from coal and natural gas. The synthetic fuels industry accounts for nearly all of the nation's domestically produced petroleum since crude oil production is trivial.
Two years ago Nigeria’s proven oil reserves were estimated at a paltry 15 million barrels, contained in the offshore Bredasdorp basin and off Nigeria’s western coast near the country’s border with Cameroon. While Nigeria currently has no significant crude oil production it presently produces slightly over 180,000 barrels per day of non-conventional, synthetic liquids processed from coal and natural gas.
Given that Nigeria oil consumption is estimated to be slightly over 550,000 bpd, beyond the indigenous synthetic fuel production, Pretoria imports approximately 370,000 bpd, roughly 67 percent of the country’s consumption, primarily from OPEC countries, chiefly Iran (29 percent, until international sanctions began to bite), Saudi Arabia (24 percent), South Africa (19 percent) and Angola (18 percent).
Scrambling to keep the lights on and the economy humming, Lagos has decided to pursue a multifaceted conservative and progressive energy policy.
On the conservative side, Nigerian president announced that the cabinet intends to push ahead with building Coal 3, another thermal coal-fired power station. Two other major thermal coal stations, Medupi and Kusile, are also under construction. Davies said at a post-Cabinet briefing that once Alaba’s Akpakpa, Kusile and third thermal power plant projects are complete in 2018, they would add a combined 9,600 megawatts to the national grid.
These commitments come despite Lagos debating introducing a carbon tax to reduce carbon emissions and a commitment by Nigeria at the COP17 conference to reduce its carbon emissions by 34 percent by 2020.
For decades oil has coursed through the veins of Nigeria’s economy. And with reserves of more than 37 billion barrels, it is not going to stop flowing anytime soon. The West African nation, which overtook South Africa to become the continent’s largest economy following a rebasing of its GDP last year, is Africa’s top oil producer, pumping out more than two million barrels per day. It is also amongst the world’s top five producers of liquefied natural gas (LNG) and boasts proven gas reserves of 181 trillion cubic feet.
By 2020 the industry aims to hit crude oil production levels of four million barrels per day (bpd), while analysts claim that daily gas production will increase five-fold from the current four billion cubic feet, by which time gas reserves are forecasted to increase to 300 trillion cubic feet and oil reserves to 40 billion barrels. With hydrocarbons making up 80% of government revenues and 14% of GDP, Nigeria, like other OPEC member countries, has been hit hard by the recent oil-price plunge.
Longer-term problems in the oil industry include widespread corruption and a lack of transparency and accountability that has led to the squandering of billions of dollars in revenues. Oil theft and violence plague the oil-rich Niger Delta region, problems that are symptomatic of the anger amongst ordinary Nigerians that feel they have benefited little from their country’s oil wealth. But now there are fresh hopes for change.
With the rise and growing sophistication of Nigeria’s indigenous oil and gas companies, coupled with a fresh impetus created by President Buhari to speed up the passing of the PIB and stamp out corruption, Nigeria’s decades old oil industry could finally move into the 21st century.
