By Bronson Jayamanna
NIGERIA (CWBN)_ The Nigerian government’s efforts to use its 203.16 trillion cubic feet (TCF) of gas reserves to stimulate economic activity and boost revenue may continue to fail as alternative energy solutions like as renewable energy and energy storage, are projected to preserve the natural reserves around the world as they are. The continuing expansion of infrastructure for Liquefied Natural Gas, in particular, train seven of Nigeria’s LNG Limited, is also facing new challenges. A report released yesterday by the Consultancy group, Wood Mackenzie (WoodMac) showed that over three-quarters of new LNG supplies are at risk.
Earlier in this year, the federal government had set the nation’s gross gas reserves at 203.16 trillion cubic feet (TCF), marking a small rise of 1.16TCF or 0.57% when compared to the 202TCF reported in 2019. Even though the government proclaimed 2020 to be the Year of Gas, The Minister of State for Petroleum Resources, Timipre Sylva, has claimed that ambitious measures would be required to unlock gas sales and economic potential.
Similarly, the Nigerian National Petroleum Corporation (NNPC) and Nigeria LNG Limited (NLNG) have agreed on an Infrastructure, Procurement and Construction (EPC) contract for LNG Train Seven, marking a successful start to the comprehensive building process of the multi-billion dollar project. Upon successful completion of the expansion, the current six-train capacity of the plant is projected to rise by 35%, from the present 22 million tonnes per year (MTPA) to 30 MTPA.
However, in contrast, WoodMac has stated that the gas market would take a hit from breakthrough investments in renewables, energy conservation in the power sector, productivity enhancement and the introduction of emerging technology in the non-power segment. They further went on to indicate that renewable energies such as hydrogen will pose a game-changer in the long term, as they would appear as a significant rival to gas demands in the next several decades and would eventually reach a 10% share of overall primary energy demand by 2050.
In countries like Nigeria, where gas-fired power plants are the primary sources of energy, market players and customers are still searching for sustainable options. Many service firms, including NNPC, have made deals for clean energy ventures. The United Nations Environment Program (UNEP) says worldwide investment in green renewable energy sources surpassed $2.6 trillion by the end of 2019.
According to the report published by WoodMac, Nigeria may also be losing out since low-cost LNG suppliers like Russia and Qatar are projected to be front-runners to fill the moderate supply void, although low Henry Hub costs will also mean competitive US LNG ventures.
The reported continued that even as Qatar and Russia seek monetisation of their low-cost resource base, and LNG demand continues to decrease after 2035, the competitive justification for other investors will become dubious.
