Shale gas discovery not a threat to Nigeria – experts say

The shale revolution in the United States may have taken a toll on Nigeria, but the discovery of large amounts of shale oil and gas in some African countries such as Algeria, Libya and South Africa is not a threat to Nigeria, experts in the oil and gas industry have said.

Of the 41 countries in which shale formations were assessed, Algeria is in the league of the top five countries with technically recoverable shale gas resources; South Africa, with limited endowments of conventional oil and gas supplies, occupies the eighth position and Libya also ranks among the top five in terms of shale oil reserves with 26 billion barrels.

According to a new report released recently by the United States (US) Energy Information Administration (EIA), the statistics arm of the US Department of Energy, the amount of technically recoverable global shale oil and gas resources is growing with the assessment of 137 shale formations in 41 countries outside the US, compared to the 69 shale formations within 32 countries considered in its 2011 report.

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Wumi Iledare, director, Energy Information and Data Division, Center for Energy Studies at the Louisiana State University, US, said: “Nigeria in the short run does not need to lose any sleep over the potential for shale resource development in Libya and Algeria. Nigeria needs to worry much more on the lack of transparency and fiscal responsibility within its oil and gas sector in terms of NNPC governance and financial autonomy than the potential shale boom in Libya and Algeria,” said Iledare.

“Nigeria is not a hotspot of known shale oil and gas reserves. It has not fully explored for shale. But given Nigeria is rich in conventional reserves, it is not necessarily a problem,” said Claire Lawrie, head of oil and gas advisory for Africa, Ernst and Young, in an emailed response to questions.

“Positively for Nigeria, the US shale ‘revolution’ was decades in the making and other countries are progressing very slowly towards commercialising these reserves. There are yet no other countries with productive shale oil and gas industries although there is interest and early exploratory efforts in many. It is more likely that Nigeria will get its heavy oil into production before South Africa can with unconventional,” reckons Lawrie.

Technically recoverable resources represent the volumes of oil and natural gas that could be produced with current technology, regardless of oil and natural gas prices and production costs.

Other African countries in the report with large shale resources include Egypt, Tunisia and Morocco.

According to professor of petroleum economics Iledare, Nigeria will attract much more investments to develop and produce the much easier oil and gas resources for the global market in Nigeria than Libya and Algeria shale resources if a transparent and pragmatic PIB is enacted quickly and an effective federal governance structure.

Ademola Oshodi, project manager, Nigerian Natural Resource Charter, said: “It is important that Nigeria fully applies good governance practice in the oil and gas sector and provide the enabling environment where exploration opportunities are improved.

The issue should not be what those countries are doing with their shale discoveries, but how we manage our potential in that sector.