$120m petroleum shipment fees: Senate asks NNPC patronize indigenous firms

By Sonny Atumah

Nigeria’s President Muhammadu Buhari, last week, commissioned the Nigeria Petroleum Development Company, NPDC Integrated Gas Handling Facility in Ologbo, Edo State. The Liquefied Petroleum Gas plant that receives gas from the Oredo Field, estimated to be the largest onshore plant in Nigeria is to process wasted or flared gas to produce several Natural Gas Liquids, NGL to create wealth.

It is one of the projects embarked upon by the MeleKyari led NNPC, and executed by its subsidiary; the NPDC to scale up utilisation of Nigeria’s natural gas resources and put spurs on Nigeria’s industrialization. With this, the NNPC is moving towards a global integrated energy company.

The commissioning came three weeks after the President launched the National Gas Expansion Programme and the National Autogas Roll-out Initiative. The alternative fossil gases, Liquefied Petroleum Gas, LPG, Compressed Natural Gas, CNG and Liquefied Natural Gas, LNG, as options for transportation, industrial and domestic use are coming at a time of global crude oil market fluctuations.

From the President, Nigeria will convert about one million cars to run on gas by the end of 2021. The initiative, government believes will enrich the trajectory of national economic growth and development, by creating millions of direct and indirect jobs for Nigerians.

Well thought out policies and programmes of governments are crucial in deciding which way to go. Governments are deciding on their areas of comparative and competitive advantages regarding fossil fuels. The fossil fuels include coal, oil and natural gas. Where nature has richly endowed a nation, they find ways of enhancing those potentials. The world energy balance is tilting towards natural gas for now.

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Ten countries hold more than two-thirds of the world’s total proven natural gas reserves. With proven gas reserves of 188 trillion cubic feet (tcf), Nigeria has the ninth largest gas reserves in the world. The Nigerian government should give this programme the utmost attention it deserves considering failed attempts in our use of fossil fuels in the past.

“What developed into a serious culture of systemic national resources management deficiency crept into the Nigerian oil industry. We are hoping that this policy will considerably reduce routine gas flaring, with unavoidable gas flared down to the acceptable level of two percent of total gas production in the country.

Global Warming and Fossil Fuels Transitioning

At the dawn of the third millennium, global warming came to the front burner. Global warming or the greenhouse effect deals with the potential for global climate change due to increased levels of atmospheric greenhouse gases. Greenhouse gases include water vapor, carbon dioxide, methane, nitrogen oxides, and some chemicals like chlorofluorocarbons.

Most of these gases occur naturally in the atmosphere, but their levels keep increasing due to burning of fossil fuels. Global warming is causing glaciers to melt, cities to sink into the ocean, and wildfires engulfing regional vegetation.

The global consensus as regards climate change caused by greenhouse gas emissions from burning of fossil fuels is getting global traction. Environmentalists have been mounting pressures for the reduction of greenhouse gas emissions.

The global pushes led to the 2015 Conference of Parties, COP 21 where 196 Parties adopted the Paris Agreement as a legally binding international treaty on climate change. The goal of the Paris Agreement that went into force in 2016 is to limit global warming to1.5 degrees Celsius. Nigeria has ratified the Paris Agreement and the Nationally Determined Contributions in 2017.

It is obviously true that there are issues of global warming associated with fossil fuels. In addition, fossil fuels are finite and exhaustive, and so, non-renewable sources of energy. Many countries are pursuing new policies and technologies in the horizon that are letting go fossil fuels for alternative energy sources.

With green energy at the front burner of global thought, nations canvass for sustainable alternatives sources from renewables like solar, hydro, biomass, wind et cetera, being preferred to fossil fuels.

The European Union, EU recently published Green Deal is becoming a policy reality. The EU road map for the Green Deal is to raise its 2030 climate targets to achieve carbon neutrality by 2050.

In it, the 2030 emissions reduction target from 1990 levels would increase from 40 percent to 55 percent. Japan has announced a plan to phase out gasoline vehicles by the mid-2030s. They are targeting “100 percent electric vehicles” in the next 15 years by gradually turning away gasoline-engine cars from the new car market.

Denmark’s parliament recently voted to phase out North Sea oil and gas production by 2050. The plan includes canceling an offshore licensing round, which only had weak interest.

A transitioning away from fossil fuels to renewable ways of producing energy, and smarter ways of consuming them is now being adapted. However, it is not enough to jettison fossil fuels because the perceived renewables that are alternatives are yet efficient and affordable.

Indeed science tells us that renewable energy support on hydropower and biomasses have their own climate problems. A recent Wood Mackenzie report indicates that it would cost a minimum of US$30 trillion to US$40 trillion of investment in energy systems and decarbonization of industries where emissions are notoriously hard to abate.

The limitations of the renewable energy sources may take almost a century in the long road to zero-emission believed to be safer and cleaner.  It therefore suggests that fossil fuels would remain the lifeblood of many economies including Nigeria. Perhaps investing in fossil gas may be an alternative. Proponents of gas claim it is a cleaner fuel than canvassed alternatives for reducing pollution and maintaining a clean and healthy energy future.

Natural gas may play essential role in the attainment of UN Sustainable Development Goals, SDG in particular, Goal 7, as an environmentally friendly, affordable, reliable, accessible and flexible natural resource for ensuring economic development and social progress.

Part of the resolution was to enhance the contribution of natural gas as destination fuel for climate change mitigation and adaptation, and the protection of the environment.  The world aims to break away from traditional and polluting energy sources such as oil and coal to focus on clean energy.

Natural gas emits about 55 per cent less carbon dioxide than coal and about 30 per cent less carbon dioxide than oil in combustion. It is becoming an efficient and competitively priced fuel for electricity generation and heating, et cetera.  Since many countries are struggling to meet their emission reduction, targeting our fossil fuels especially gas should be our investment haven.

Resolving Contradictions on Gases

In doing so, we must resolve the contradictions in the idea of gas. Ones interaction with the public shows ignorance or lack of understanding of what government really wants to do. Public support for the policy is not encouraging. Why the change from conventional fuels of gasoline and diesel they know to LPG or autogas, CNG, LPG, et cetera.

Interchangeably we confuse what the types of gases are. What areNGL, LNG, LPG, CNG, and so forth are what officials need to communicate effectively. Natural Gas Liquids, NGL are components of natural gas that we separate from the gas state in the form of liquids.NGL are byproducts of natural gas processing and refining.

They are ethane, liquefied petroleum gases (propane and butanes) and natural gasoline.The uses of natural gas liquids include cooking, space heating, and blending NGLs into fuels for vehicles.Liquefied Natural Gas is the traditional natural gas, which has been cooled to the point of liquefaction.LNG is natural gas that we convert to a liquid form for the ease and safety of natural gas transport. It is what is left over after most of the NGL are stripped out from the natural gas stream.

When natural gas is cooled to minus 161 Celsius it becomes a liquid and can be sold as LNG, a fuel with domestic, international, industrial and transportation uses. Methane is the primary component of natural gas. Methane is a dry, or natural gas, but not an NGL or an LPG but stands alone as LNG. The public including critics need to be enlightened that LPG and CNG are both natural gases used in industries, domestically as a cooking fuel, automobile fuels, refrigerant, etc.

They are both transposable fuels that are stored in cylinders. What are the inflammable risks of these gases? Governments across the world are promoting LPG as auto fuel as it emits lesser quantities of greenhouse gases. When used as a vehicle fuel, it is autogas.

Autogas is the shortened form of automotive liquefied petroleum gas (LPG), meaning LPG used as an automotive transport fuel.  The World LPG Association, WLPGA experts in a 2019 Global Road Map for Autogas believe that fossil-based Autogas could be a long-term “bridging fuel” to mitigate greenhouse-gas emissions until ultra-low or zero-emission vehicle technologies can be commercialised on a large scale.

Experts predict that a fall in fossil fuel demand will lead to a fall in fossil fuel prices. This might lead to existing reserves remaining undeveloped or stranded. It means that fossil fuel projects otherwise commercially viable will be less valuable. It may in turn diminish the rents and therefore tax revenues fossil fuel extraction can generate for producing countries.

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Thus encouraging the government’s efforts on the numerous investment opportunities in gas that Nigeria has in abundance should be a priority.

CBN Intervention Facility

The government through the Central Bank of Nigeria (CBN) is introducing the N250 billion intervention facilities to help stimulate investment in the gas value chain.

The intervention is in gas processing plants and small-scale petrochemical plants, gas cylinder manufacturing plants, auto gas conversion kits or components manufacturing plants, CNG primary and secondary compression stations, manufacturing of LPG retail skid tanks and refilling equipment and other mid to downstream gas value chain related activity recommended by the Ministry of Petroleum Resources, MPR.

MeleKyari and his Team

Nigeria has never lacked in policy formulation. Our problem has been in implementation including monitoring and evaluation. Timelines and performance indicators are what we must not gloss over. Of course, implementation starts with communication with the people.

The driver of the current gas revolution is the Group Managing Director of the NNPC, Mallam Mele Kyari. Kyari is the focal person for the Open Government Initiative in the industry.

The Open Government Initiative is a global body that believes that making government information available to the public is a requirement for an informed citizenry and accountability by the government.

He is to work collaboratively with the Chairman of the National Gas Expansion Programme, NGEP, Dr. Mohammed Ibrahim and his committee members that report to the Minister of Petroleum Resources.

Of course,Kyari is a good team player but he needs the cooperation of the MPR and CBN to implement the 2017 National Gas Policy, which thrust, is to serve, as a catalyst for the country’s rapid development. The United Nations Climate Change time is set and the clock is ticking. Nigeria must watch the timekeepers before darkness falls on our abundant natural gas reserves.

Vanguard News Nigeria

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