Nigeria’s energy transition agenda received a boost on Thursday at the CERAWeek energy conference in Houston, Texas, as the US Government expressed interest in a bi-lateral partnership that would see the conversion of vast gas resources currently flared to ammonia.
Ammonia has the potential to be a huge revenue earner for the country, especially now that the European Union has unveiled its long-awaited plans to make importers and non-EU manufacturers pay for the carbon emissions associated with the goods and materials they sell in the EU, thereby affecting vessels powered by fossil fuels entering EU territory.
Because operating such vessels during that tax regime will be economically unviable, there is a need to redesign their engines; and attention is already being focused on ammonia as an alternative fuel source, to replace heating oil and other fossil fuels. Ammonia is being used because it is not only cleaner, but also a less expensive source of energy.
It invariably means that there will be no easy and appealing market for heating oil, which is one of the most highly sought-after products in the configuration of Nigeria’s refineries.
The EU’s adoption of the Carbon Border Tax has the potential to harm Nigeria’s economy, which is largely supported by proceeds from its hydrocarbon potential.
This would exacerbate the challenge already posed by developed countries’ zealous pursuit of a zero-emissions plan, as a result of lower earnings from Nigeria’s refinery-configured products such as heating oil (i.e. LPFO, HPFO).
The Paris Agreement and the United Nations Framework Convention on Climate Change seek to limit the development of oil and gas projects in the next two decades in order to pursue more environmentally friendly energy options – from fossil fuels to green and renewable energy.
This poses a significant threat to the country’s major revenue stream, which is why Nigeria’s main focus at the conference was on sustaining current revenue drivers while also considering other viable options.
The Nigerian delegation was led by the Minister of State for Petroleum Resources, Chief Timipre Silva, and included the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission, Engr. Gbenga Komolafe, and the Board Secretary and Legal Adviser to the NUPRC, Barrister Olayemi Anyanechi.
At various meetings with top officials from the global energy circuit, the team continued to drive conversations about energy transition in a multi-track approach.
It argued that rather than abandoning further hydrocarbon infrastructure development and phasing out fossil fuel use within the specified time frame, a multi-track approach with gas as a transition energy source would be fair and just to pursue.
According to Chief Silva, Nigeria already has a transition plan in place that is based on a multi-track approach to developing energy resources. One of these is a focused development of the country’s gas resources, during which time a diversified economy based on technology and other energy sources would be built.
This, he emphasized, would go a long way toward increasing the country’s revenue and sustaining its economy.
Discussions on the subject were conducted from various angles, including focusing on gas potentials and the implications of continued gas flaring and reinjection.
The impact of flaring on the environment and the health of people in oil-producing communities was specifically highlighted as the team investigated concrete solutions to the problem.
The American counterparts agreed on the responsible monetization of Nigeria’s gas resources as a point of convergence. The US team praised the Nigerian government’s multifaceted approach to reducing emissions and made suggestions on innovative ways to develop stranded gas resources in a more responsible manner, including the use of Blue Hydrogen, which is produced when natural gas is split into hydrogen and carbon dioxide using either Steam Methane Reforming (SMR) or Auto Thermal Reforming (ATR) (ATR).
However, carbon dioxide is captured and stored, which reduces the negative impact on the environment.
This, according to the US team, would be a good way for Nigeria to utilize its abundant natural gas resources of over 200 trillion cubic meters.
During one of several meetings attended by US Secretary of State for Energy, Jennifer M. Granholm, and another attended by Honourable Harry Kamian, Assistant Secretary of State for the US Department of State Bureau of Energy Resources, the US Government expressed interest in collaborating with the Nigerian government to develop the country’s gas resources, acknowledging that Africa may indeed require separate recognition, as long as development continues.
Besides that, the US Department of Energy promised to assist Nigeria in establishing a framework for the development of its gas resources in collaboration with development partners.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) team met with Brendan Kelly of the US Department of Commerce and Puneet Sharma of CyanNH3 to discuss extensive methane abatement opportunities in Nigeria, in partnership with the US government, particularly in the area of conversion of gas to ammonia for use as fertiliser or export.
The team emphasized that the proposed EU Carbon Border Tax would put severe financial pressure on the use of LPFO and HPFO by vessels and provide a renewed impetus for producers around the world to accelerate efforts to reduce their carbon footprints, creating a massive opportunity for the use of ammonia as the preferred fuel.
In response, the US team promised to collaborate with the Nigerian government by funding a study to assess the viability of making Nigeria an Ammonia net export nation from the 218 sites that flare an average of 0.7 BCF of gas daily, with skid mounted innovative ammonia production equipment and other virtual pipeline development devices.
Besides that, the US Departments of State and Trade agreed to collaborate with Nigeria by funding a study to mature these initiatives into full gas commercialization and convert waste into a source of federation revenue generation while eliminating environmental degradation.
Finally, the successful launch of the project would not only provide the country with another massive revenue stream, but would also address the issues of environmental pollution and the resulting health challenges faced by residents of oil-producing communities as a result of gas flaring.
In essence, the success of ongoing discussions with the U.S. government and proposed development partners will not only arrest environmental degradation and guarantee the health of the people, it also has the potential to generate much needed foreign exchange for the country.
In essence, the success of ongoing discussions with the US government and potential development partners will not only halt environmental degradation and ensure people’s health, but it also has the potential to generate much-needed foreign exchange for the country.
