• Friday, May 24, 2024
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Diversifying our resource base(oil & gas) for petrochemicals exports (Part II)



Take for instance, the cost of conventional sources of energy, less taxes, is about Naira4.5 per kilowatt hour(kw-h), wind energy comes next @ Naira7.5-Naira10.5 per kw-h(which is why it is being increasingly used in Europe), large-scale indirect solar energy using reflector-collector systems(inverter) costs Naira12-Naira15 per kw-h; while photovoltaic sources of energy cost Naira37.5 a kw-h. We can definitely not compare notes on costs when the energy source is fossil fuels like energy generated by either gas-fired power plants or coal-fed thermal plants. The disparity in energy cost from fossil fuels and renewables is too much. With the above analysis in mind, our oil & gas reserves will encourage partnerships with the IOCs in both the upstream and the downstream segments of the industry along with a growing national workforce and ‘good business climate’ towards achieving our national goal in 2020. the future is definitely bright.
With the obvious desire by the European Union to diversify its energy sources which presently relies on Russia’s Gazprom for 25% of its gas imports, a successful completion of the Nigeria-Algeria’s USS 13 billion trans-Sahara pipeline project as a future relief from Russia gas monopoly will be a welcome development to the EU states. Our proven natural gas reserves of 180 trillion cubic feet, being the seventh largest in the world, our relative cost advantage in, and the abundance of gas with availability of condensates make Nigeria an ideal investment area for gas-based chemicals, particularly derivatives of ethylene, polyethylene and ethylene glycol; due to the high cost of transporting ethylene under pressure to market regions, like Asia.
Based on its(ethylene) cost advantage, ethylene and benzene as components of styrene; Nigeria could become a large exporter of styrene to Asia where styrenic polymer has very high demand growth. The trend in the petrochemical supply chain could be exploited with our great potentials in ethylene’s relative availability to compete effectively thereby shifting the global trade patterns. Styrene is the largest benzene derivative(in place of cyclohexane and cumene) with olefinic component(ethylene).

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The present trend of trade on aromatics derivatives like benzene, toluene, mixed xylenes and styrene needs to shift from being net importer to a significant aromatics supplier through refining process in the newly proposed modern petrochemical refineries by the FG. The Bonny LNG plant exports LPG and condensates as well, to Europe and North America; where these feedstock are utilized and converted to the finished aromatics derivatives(organic solvents like toluene and xylene inclusive), in return these petrochemical intermediates are subsequently sent back to Nigeria at very exorbitant costs as imp[orts; instead of netbacks that would be yielding in addition to the already available products like LDPE and HDPE. The cost advantage we have will continue to be a positive influence on petrochemical investments in Nigeria. With such development, Asian market for styrene would be advantageously exploited; knowing that the manufacture of styrene consists about 27%(by weight) of ethylene(a C2 olefinic gas) as raw material.
The new gas-based petrochemical technologies makes it imperative that the global market competitiveness of petrochemical products would increasingly be based on lower-cost supply. This favours Nigeria as a country to attract larger producers with major investment interest being that, innovation in technology and low cost supply are the major competitiveness factors that will affect the entire petrochemicals supply chain.
However, Nigeria needs to tighten loose nooze in the oil & gas sector with a view to achieving optimal goals and making exploits through the availability of our abundant oil & gas reserves towards successful actualization of our national goal. This we need to do now that the price of crude in the international oil market dipped in late 2008; to focus more on developmental projects in the downstream oil & gas sector. With new refineries and petrochemical plants on ground, our goal for 2020 shall be a bankable target.
Our NOC(the various segments of the unbundled NNPC) need to be designed in such a manner to stimulate industrial growth and investment in the country and West African sub-region; with the following steps:
1. Our projects need to aim at developing an extensive gas supply(domestically and internationally) and infrastructure system.
2. We need projects that will encompass activities along the entire “gas value chain”, from the development of gas reserves to promoting stimulus for our local content values. It is easier to nip it at the bud now that the Russians are coming in fresh for joint ventures in the gas sub-sector, the issue of local content should be equivocally spelt out from the on set.
3. We need to create new energy markets, while meeting the growing domestic demands.
4. We need to generate opportunities for profitable investment through viable and sustainable Public-Private-Partnerships (PPP).