Natural gas is game-changer in Nigeria’s quest for energy security

Globally, natural gas has become a game-changer in the energy sector, and Nigeria is no exception. With its clean and reliable benefits, natural gas is fast morphing into a critical component of Nigeria’s quest for energy security. It provides a sustainable and environmentally friendly source of energy and is contributing to the country’s effort to diversify Nigeria’s economy which has been heavily dependent on oil.

The country is expanding gas-based industries for liquefied natural gas (LNG) production and export, compressed natural gas (CNG) for transportation, and domestic gas distribution networks while developing necessary infrastructure such as pipelines, gas processing plants, and storage facilities among other benefits.

With an estimated 202 trillion cubic feet of proven natural gas reserves, making it the ninth-largest natural gas reserve in the world, Nigeria has struggled to maximise the potential of this resource due to several factors, including inadequate gas pipeline infrastructure, low prices, and a lack of investment.

In recent years, the government has made significant efforts to develop the energy sector, recognising its potential to transform the country and drive economic growth. These efforts seem to be paying off, with the share of gas consumption rising from 14 percent in 2010 to 32 percent in 2021 according to data from energy resources, enerdata.net.

Accepting the advantage of natural gas as a reliable and clean source of energy, the Federal Government continues to take several steps to promote its adoption. One of these is the ‘Decade of Gas’ initiative. It is a government-led initiative aimed at harnessing the country’s vast gas reserves to drive economic growth and development. It was launched on March 29, 2021 by President Muhammadu Buhari in Abuja. Under the plan, Nigeria will, in collaboration with other stakeholders, ramp up gas use in the decade from 2020-2030.

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The ‘Decade of Gas’ initiative is built on the premise that gas is a key driver of economic growth and development. Nigeria’s nearly 209 trillion cubic feet (tcf) of natural gas reserve which ranks as the ninth largest in the world, harnesses only about 8 billion standard cubic feet per day (bscf) of gas, and most of it is sent to the export market. The $20bn dollar initiative is centered on four key pillars: increasing domestic gas utilization, expanding gas infrastructure, growing gas exports, and attracting foreign direct investment into the gas sector.

To further support the adoption of natural gas, the government has also introduced several policies and initiatives, including the Nigerian Gas Flare Commercialization Program (NGFCP), which aims to eliminate gas flaring and encourage the commercial use of natural gas. The program offers incentives to companies to invest in natural gas projects and provides a platform for the sale of gas to domestic and international markets. The Federal Government is also making concerted efforts to improve the country’s gas infrastructure by expanding pipelines and investing in new gas processing facilities. These efforts will help to increase the distribution of natural gas, making it more accessible to manufacturing and commercial concerns, households, and businesses across the country.

In addition to the Federal Government’s endeavors, the private sector has played a crucial role, especially in the areas of infrastructure development and deepening natural gas utilisation. The collaboration between the public and private sectors has been essential to attracting investments, promoting innovation, ensuring efficient operations, and expanding the utilisation of natural gas resources.

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Axxela is no stranger to these as the company has been at the forefront of the transformation agenda to enable a robust and sustainable natural gas ecosystem in Nigeria. Its contribution can be traced back to the commencement of the 10km Greater Lagos Gas Pipeline project, a pioneering private sector piping, and distribution of natural gas to commercial and industrial consumers.

Following this foundational achievement, Axxela has gone on to commission other gas infrastructural projects in Lagos, Rivers, and Ogun States. With its extensive pipeline network and strategic partnerships with upstream gas suppliers, Axxela can offer a stable and secure supply of natural gas that is not subject to the same price volatility as other fossil fuels such as oil. This brings to fore the realisation that natural gas is one of the mainstays of global energy and Nigeria as one of the largest producers of natural gas in Africa, has the potential to utilise this resource to transition to cleaner energy in the following ways:

Natural gas for electricity

Natural gas has the potential to significantly improve electricity generation in Nigeria, particularly through the development of captive and embedded power projects. Captive power refers to the generation of electricity by a consumer or a group of consumers for their own use, typically within a specific industrial or commercial facility, while embedded power refers to small-scale power generation units that are integrated into the distribution network. These power generation sources are typically connected at the distribution level, closer to the end consumers, rather than at the transmission level. Captive and embedded power projects utilising natural gas can significantly reduce the reliance on diesel for electricity generation, which is a major source of air pollution in Nigeria’s cities.

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Natural gas-fired power generation is cleaner and more efficient, leading to reduced emissions of greenhouse gases and other pollutants. Investments in captive and embedded power projects are on the rise in Nigeria.

The expansion of natural gas infrastructure including the development of gas pipelines, liquefied natural gas facilities, and domestic gas utilisation projects has given rise to it with private firms like Axxela leading in power infrastructure development.

Overall, the development of captive and embedded power projects utilising natural gas is a significant opportunity for Nigeria to improve electricity generation. With the right policies and investments, natural gas can play a crucial role in Nigeria’s energy transition towards cleaner and more sustainable energy sources.

Natural gas for industrial use

Natural gas has the potential to disrupt the industrial sector in Nigeria by providing a cleaner, cheaper, and more reliable source of energy for manufacturing processes. In recent years, diesel has been a mainstay for the energy needs of industries, leading to high operating costs and reduced competitiveness, but the 2022 hike stirred a rise in the switch to natural gas for industrial processes.

Several industries in Nigeria particularly in the South-West zone, have started utilising natural gas for their energy needs, including the cement, textile, and fertilizer industries bringing to fore that natural gas will continue to be a central component to producing everyday products, however, there is still a need for more investment in natural gas infrastructure and policy support to accelerate the uptake of natural gas in industrial sectors not fully aligned with the switch.

Natural gas for Residential Use

In developed countries, highly efficient, distributed gas-fired combined heat and power systems will help to reduce greenhouse gas emissions. In developing countries, natural gas has replaced wood and coal in heating and cooking, helping to improve health conditions.

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These systems also support the integration of low-emissions sources of energy, including geothermal heat and power, solar, wind, and batteries. For Nigeria and other African countries, most apartment buildings still rely on diesel generators or grid electricity, which can be expensive and unreliable, however, there has been a rise in natural gas utilisation for energy needs in upcoming real estate investments particularly in the suburbs. However, there is still a need for more investment in natural gas infrastructure and policy support to accelerate the uptake of natural gas as a cost-effective source of energy for buildings.

Natural Gas for Transportation

Liquefied natural gas (LNG) is helping to diversify the fuel mix and reduce air pollution as a fuel for heavy-duty road transport and shipping. Natural gas is also converted into high-quality cleaner-burning gas-to-liquids (GTL) fuels for heavy-duty vehicles, and inland and seagoing marine vessels.

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Compressed Natural Gas (CNG) has also been embraced as a fuel for transportation in Nigeria. CNG offers the opportunity to diversify the country’s energy sources for transportation. Nigeria heavily relies on imported gasoline and diesel, which can strain its economy due to fluctuations in global oil prices. Promoting CNG as a domestically sourced fuel reduces dependence on imports, enhances energy security, and supports the utilisation of the country’s abundant natural gas resources.

By leveraging the country’s abundant natural gas resources and growing gas infrastructure network, Nigeria can move towards a cleaner, more sustainable, and economically beneficial transportation sector.