Natural gas emerged as the world’s fuel of choice, posting the biggest gains and accounting for 45 percent of the rise in energy consumption in 2018, according to a new report by Paris-based energy think tank, International Energy Association (IEA), but poor policy and weak market rules constrain growth in Nigeria.
The IEA in its latest assessment of global energy consumption and energy-related CO2 emissions for 2018, which provides a high-level and up-to-date view of energy markets, including latest available data for oil, natural gas, coal, wind, solar, nuclear power, electricity, and energy efficiency, the organisation said global energy demand rose 2.3 percent with gas accounting for most of the growth.
“We have seen an extraordinary increase in global energy demand in 2018, growing at its fastest pace this decade,” Fatih Birol, IEA’s executive director, said.
“Last year can also be considered another golden year for gas, which accounted for almost half the growth in global energy demand,” Birol said.
Led by United States and China, global gas demand expanded at its fastest rate since 2010, with year-on-year growth of 4.6 percent, the second consecutive year of strong growth, driven by higher demand and substitution from coal, the IEA said.
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Electricity demand grew by 4 percent with renewables responsible for half of it; oil demand grew 1.3 percent; coal consumption rose 0.7 percent, and nuclear energy rose by 3.3 percent in 2018.
Though Nigeria has the world’s ninth-largest volume of proven gas reserves of 187 Trillion Cubic Feet (TCF) and also ranked fourth among Liquefied Natural Gas (LNG) exporting countries, according to the International Gas Union (IGU), supply to the local market hovers around 1.3BSCFD, one of the lowest among its OPEC peers.
Yet, the country has a huge need for gas to drive industrialisation and deliver energy to over 80 million Nigerians without access to power.
Absence of legally binding, bankable long-term gas supply agreements, inadequate gas transportation infrastructure, absence of guarantees, credit enhancement for gas payments and absence of commercial pricing are key constraints in the Nigerian gas market, analysts say.
The roadmap for the gas sector created under the Nigerian Gas Policy has not delivered on expectations, operators say. The National Gas Policy created by the Petroleum Ministry is yet to have an impact as it has not been operationalised, limiting investment into the sector.
However, a rash of new gas deals – including $500 million Greenville LNG project in Rumuji, Rivers State, the final investment decision on Assah North/Ohaji South gas project, and the newly commissioned Egbaoma gas processing plant in Delta State – suggests Nigeria is turning the corner from treating gas as irritant in the search for fuel.
“To some extent, Nigeria, which is a gas province with a drop of oil, is slowly beginning to realise the potential of natural gas,” said Olufola Wusu, energy lawyer at Megathos Law Practice.
Chijioke Mama, founder of Meiracopp Nigeria Limited (MNL) and a doctoral researcher in Business Management agrees that he sector is increasingly becoming attractive.
“For me, I like to look beyond the sector-specific gains of these laudable gas projects in themselves. Because it is gas, I am equally excited about the larger economic benefits of a well-developed gas sector for the Nigerian economy, which is what projects like this herald,” Mama said.
Nigeria currently produces 8.0 bcf/d of natural gas but 38 percent of this, or 3.05 bcf/d, is exported in the form of LNG by the Nigeria LNG. Thirty six percent, or 2.9 bcf/d, serves as rejection fuel and for other operational uses. Sixteen percent, or 1.3 bcf/d, of gas produced is dedicated for domestic consumption in power and industries and 0.75 bcf/d or 10 percent is flared.
Oil sector experts say reforms in liberalising gas prices and creating gas terms for Production Sharing Contracts (PSCs) will help to meet a growing demand for gas in the domestic market.
“The demand for gas within the Nigerian energy sector has risen significantly. Channelling resources to developing strategies for protection of gas pipelines and supply for local consumption would provide more stability for the sector which would invariably trickle down to the development of the economy,” said Ayodele Oni, energy lawyer and partner at Bloomfield law firm.
The IEA said that energy demand worldwide grew by 2.3 percent last year, the fastest pace this decade and an exceptional performance driven by a robust global economy and stronger heating and cooling needs in some regions. Gas demand growth was especially strong in the United States and China.
ISAAC ANYAOGU
