Page 5 - AfrOil Week 13 2022
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AfrOil                                       COMMENTARY                                                AfrOil


                         “Nigeria needs to ramp up crude oil production   a $1.2bn deal with a local firm, Seplat Energy, to
                         on existing discoveries that have not yet mate-  hand over its shares in four oil mining licenses
                         rialised to be able to sustain a secure supply in   and natural gas recovery plants. Factors such
                         future to meet local, regional and international   as vandalism of infrastructure, the continued
                         demand. Lifting of force majeure at the Brass   failure to invest in new exploration and politi-
                         terminal, Bonny NLNG and Okpai power   cal instability/civil unrest in oil- and gas-rich
                         plant comes at the right time. We have to con-  regions of Nigeria also continue to disrupt the
                         tinue paying attention on vandalism, sabotage   country’s ability to optimise production and
                         and theft in oilfields. The close collaboration   increase exports.
                         between the government and Industry could not
                         be more important now,” stated NJ Ayuk, AEC’s   Reforms and improvements
                         executive chairman.                  Despite these deficiencies, last year’s recent
                                                              enactment of the Petroleum Industry Act (PIA)
                         Gas capacity                         is a game-changer for Nigeria’s oil and gas mar-
                         Meanwhile, on the gas front, Nigeria’s massive   ket, as the law is anticipated to increase the
                         production capacity will place the country   entrance of IOCs and investors.
                         among the top three producers in Africa in   The PIA is expected to provide clarity to
                         2022 and a potential supplier to meet demand   market players on issues of taxation, investment
                         in Europe. Nigeria has an estimated gas reserve   and licensing that have previously slowed down
                         of 209 trillion cubic feet (5.919 trillion cubic   deployment.
                         metres) and will produce 1.78 trillion cubic feet   The law is expected to boost investment in
                         (50.41bn cubic metres) in 2022, up from 1.45   oil and gas upstream activities to improve explo-
                         trillion feet (41.06 bcm) in 2021.   ration, production, infrastructure development
                           Existing producing projects and the projects   and the country’s energy portfolio.
                         currently under development in Nigeria are   The Nigerian government has been taking
                         expected to ensure a resilient supply through   measures to make its oil and gas market more
                         2025. With this portfolio, Nigeria has an advan-  attractive, but so far, the country’s hydrocar-
                         tage for Europe to look up to the West African   bon energy resources remain not fully tapped.
                         country as a potential supplier.     Nigeria has not been able to fully leverage its oil
                           Additionally,  the  4,128-km  Trans-Sa-  and gas reserves to meet local demand and to  As the EU seeks
                         haran Gas Pipeline (TSGP) planned by the   increase exports. Today, 50% of the Nigerian   alternative
                         governments of Nigeria, Niger and Algeria   population is living in energy poverty.
                         will eventually be capable of integrating with                            supply chains to
                         trans-Mediterranean pipelines such as Gaz   Discussing the issues
                         Maghreb-Europe (GME), Medgaz and Galsi,   AEC’s upcoming annual conference – African  reduce reliance
                         thereby allowing Europe to leverage gas from   Energy Week (AEW), which will take place
                         both West and North Africa to meet demand.   October 18-21, 2022, in Cape Town – will   on Russian
                         Once completed, TSGP will transport 30 bcm   discuss policy, investment and infrastructure   gas, Nigeria
                         per year of gas, and Nigeria, as a leading pro-  requirements for Nigeria to boost its energy pro-
                         ducer in Africa, can produce a significant share   duction to meet local demand whilst expanding   could provide a
                         of that capacity.                    its energy exports to Europe.
                                                                With Europe seeking alternative supply  significant share
                         Better infrastructure                chains to reduce reliance on Russian gas, Nigeria
                         “Nigeria is rich in oil and gas resources but still   could provide a significant share of the capac-  of the capacity
                         does not have adequate infrastructure, such as a   ity the bloc needs. The European Commission,   the bloc needs
                         functioning refinery. In order to utilise its oil and   governments, energy companies and financial
                         gas resources effectively, Nigeria needs to build   institutions can help Nigeria with the funding
                         more infrastructure locally to process its energy.   and technical expertise required to speed up
                         To be able to build the infrastructure needed,   the development of infrastructure for increased
                         there is a need for direct involvement from a   production and energy transportation. AEW
                         combination of the private and public sector   2022 will hosts discussions around future Nige-
                         partners,” stated Hendrick Malan, the CEO of   ria-Europe partnerships on oil and gas trading.
                         energy market research firm Frost & Sullivan, in   The African Petroleum Producers Organ-
                         an exclusive interview with the AEC.  isation (APPO), a consortium of hydrocar-
                           Additionally, Nigeria’s current gas fields   bon-producing countries, will rally its member
                         are expected to see production levels decline   countries – including Africa’s top oil and gas
                         sharply as we approach the mid-2020s. At the   producers Nigeria, Equatorial Guinea and Alge-
                         same time, major international oil companies   ria – to participate at AEW 2022 and discuss
                         (IOCs), including ExxonMobil (US), Shell (UK)   continental energy market trends, opportunities
                         and TotalEnergies (France), all of which have   and the role its member states can play to ensure
                         been top producers of oil and gas in Nigeria, are   global energy security.
                         expected to diversify their portfolios from 2022   AEW 2022 will host panel discussions, round
                         onwards and exit the market. Their exit might   tables, presentations and high-level meetings
                         negatively affect production and reduce the   about how Nigeria and APPO member states
                         ability of the West African country to expand its   can improve exports to Europe whilst addressing
                         energy exports to Europe.            energy poverty at a continental level. (Reprinted
                           Meanwhile, ExxonMobil has already signed   courtesy of African Energy Chamber)  ™



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