Category: Energy

Experts and stakeholders in the energy sector smooth and beyond will converge at the Nigeria Energy Exhibition and Conference scheduled to hold in Lagos.

The event will address the critical challenge of the region’s energy access, from September 19 to 21, in Lagos.

The event, themed: “Unlocking new value with reforms, investments and technology,” is the 10th edition, will bring together government, private sector, and investors to find solutions to the challenges facing Nigeria and West Africa’s electricity sector.

The Exhibition Director – Energy portfolio – MEA, Informa Markets, Ade Yesufu, said: “Nigeria and West Africa’s Energy sector are currently undergoing a significant transformation, with a strong emphasis on addressing the critical challenge of energy access. Nigeria has abundant natural resources making it capable of improving the country’s electrification rate and achieving its energy goals with the right investment and policies. Over the years, the Nigeria Energy Exhibition and Conference has gathered local and international stakeholders to collaborate across the value chain and proffer solutions to the region’s energy challenges. With our 10th anniversary, this 2023 edition will build on past success and offer special high-level seminars targeted at proffering viable mechanisms to solve the challenges in the Energy sector.

The conference will bring together energy equipment manufacturers, distributors, procurement professionals, dealers, and regulators to lead the discourse on unlocking new value utilising reforms, investments, and technology.

The conference would discuss key topics including: Power sector decentraliation – new legislations and framework in Nigeria; Role of Natural gas as a transition fuel in achieving a net-zero economy; Funding opportunities – Are investments finally moving in?; Leadership panel: What are the steps taken by DisCos to encourage climate-driven investments?; Emission trading – New reforms in Africa?; Leveraging the power of digital technology to deliver value to customers.

A 30-megawatt embedded power plant is set to change the narrative in power generation. On its completion, the plant, estimated to cost $50 million, will ensure uninterrupted power supply in its catchment area in Victoria Island, Lagos State. MUYIWA LUCAS reports.

Stakeholders in the power sector are not relenting in finding a solution to the unstable electricity supply.

 The Electricity Reform Act 2023 signed into law by President Bola Tinubu, it is believed, has further provided an enabling environment for more participants to key into the sector.

However, given the quantum of financing required for power projects, partnerships in actualising this are touted as the best option to move forward if only the country hopes to gain speed in delivering this much-needed service.

It was, therefore, instructive when the Eko Electricity Distribution Company (EKEDC) and Elektron Energy Development Strategies Limited, undertook a sod-turning to signal the take off of construction of a 30- megawatt (MW) Gas-fired Embedded Power Plant.The project, to be constructed in Victoria Island, Lagos, is estimated to cost $50 million, with an 18-month completion period in its first phase.

Under the arrangement, EKEDC is providing the location in its facility  in Victoria Island where the substation will be built and will take up the power generated into its distribution network. However, this will only be put into use by residents of Victoria Island.

Described as the first of such initiative, the plant, designed to be gas-fired, will ensure reliable and consistent electricity supply to the residents. This is just as it will create 250 direct and indirect jobs. Besides, the embedded power plant is also expected to be environmentally-friendly as it will displace about 500 generators, freeing the state of 9,000 tonnes of carbon dioxide emission.

The Chairman, EKEDC, Oritsedere Otubu, mainitained that embedded power plants remain the best option for sustainable and reliable power in Lagos State at cost-reflective tariff.

According to him, the project marks a milestone as it would also revolutionise the energy landscape in the state, especially with the partnership  between Eko DisCo and Elektron Energy toward effective power supply for residents of Victoria Island and its environ.

He said the gap in generation, which has been a lingering issue impacting service delivery in value chain, particularly, the ability of DisCos to meet with its service commitment to customers, led to the project.

“The industry still records about over 4, 000 megawatts as its peak generation. Studies have shown that the same is not enough to service Lagos State estimated as having a population of over 27 million, let alone the country. These real issues contributed to the discussions that culminated into this project,” he said.

Otubu recalled that the emergence of Elektron Energy birthed the deal that has, over these past years, led to the unlocking of premium power access to Lagosians within Eko Disco’s franchise network.

Noting that the Power Plant will employ cutting-edge technologies, ensuring efficiency, reliability and reduced environmental impact, the EKEDC chairman said electricity is the lifeblood of modern society, driving economic progress, empowering industries, and improving the quality of life for citizens. However, he regretted, the country still struggles with its challenges.

“Today, we rise to those challenges and embark on a transformative path towards a brighter future through this ground-breaking ceremony that will see to the building of a 30-MW Power Plant to deliver more capacity to Lagosians.

The power generated here will not only meet the energy demands but also anticipate and accommodate the future needs of Lagosians. In addition, the Power Plant will generate countless job opportunities, driving growth, and empowering our communities,” he said, adding that with a Multi-Year Tariff Order (MYTO) load allocation of 513 MW, an addition of 30 MW from the plant edges EKEDC toward meeting its demand requirement to its customers and with an increased capacity.

Similarly, Chief Executive Officer, Elektron Energy Development Strategies Limited,   Tola Talabi  said the project is a natural gas-fired embedded generation plants developed through the  efforts of Elektron and EKEDC.

Talabi said the embedded IPP would supply uninterrupted electricity through dedicated 33KV and 11KV distribution network to identified customers.

He said the project is the first of its kind, where a natural gas IPP would be embedded into a Disco’s distribution network for supply to identified end-user customers.

According to him, the 18-month project, when completed, will ensure reliable, affordable electricity to customers.

Lagos State Governor,  Babajide Sanwo-Olu, represented by the Permanent Secretary, Lagos State Ministry of Energy and Mineral Resources, Sola Shasore, an engineer, appreciated the promoters for the step to provide uninterrupted power supply in the state.

“This is what we love to see and we hope it will continue in the state because we desire an affordable power supply,” Shasore said.

Nigeria and other member countries of the Organisation of Petroleum Exporting Countries (OPEC) earned $873.6 billion from oil export in 2022.

 The OPEC’s petroleum export revenue climbed to the highest in almost a decade last year, as Russia’s war on Ukraine bolstered crude prices and key members ramped up production.

Last year, the 13 nations of the OPEC, earned $873.6 billion, up by 54 per cent from the previous year, according to a report released during the week from the group’s secretariat. It was their best year since 2014, when the United States’ shale boom ended a historic  period of high oil prices.

Crude soared last year as energy flows from Russia, which joined with the cartel in 2016 in a wider network known as OPEC+, were disrupted by international backlash against its military aggression. Brent futures averaged about $99 a barrel, the highest since 2014.

Meanwhile, OPEC nations such as Saudi Arabia and the UAE opened the taps to satisfy the post-pandemic recovery in fuel demand.The combination of surging prices and increased output pushed up earnings for the group.

The basket of crude grades typically sold by OPEC nations averaged just over $100 a barrel last year, while Bloomberg estimates show that crude production from its 13 states was about 29.2 million barrels daily. The figures for petroleum revenue also include sales of refined products.

OPEC’s earnings peaked at about $1.2 trillion in 2012, just as the use of hydraulic fracturing — also known as fracking — was unlocking a gusher of shale-oil in American states from Texas to North Dakota. The ensuing market crash spurred the Saudis and Russia, once fierce rivals, to form the OPEC+ coalition in 2016.

Revenue comparisons since then are complicated slightly by changes in OPEC’s membership. Some countries, including Qatar and Ecuador, have quit the group while others such as Equatorial Guinea and Gabon have joined.

This year, OPEC+ is once again engaged in production cuts to prop up crude markets, as China’s economic recovery disappoints and tightening interest rates in the US and elsewhere stir fears of a recession. Last week, the Saudis announced they would prolong an extra one million barrel—a-day cutback into August, and Russia made a new pledge to pare exports.

Yet, the measures are struggling to support the market as the economic outlook frays and supplies exceed expectations from OPEC+ members such as Iran, Venezuela and — despite its repeated promises of restraint — Russia.

   Brent remains under $80 a barrel, far below the levels the kingdom needs to cover government spending.

Gas powered generators are taking the centre stage, replacing those running on fuel. Though it is not a new technology, the trend is on the rise; following the removal of petrol subsidy. While it is cost effective, there are concerns over its safety. MUYIWA LUCAS writes.

The gas potential of the country has been espoused at several fora, with nothing tangible really done or put in place to match it. However, with the global race towards a cleaner energy usage, leading to dwindling investments in fossil fuels by oil majors, countries have begun to take a second look at gas, which is the emerging bride in energy circle.

 With an estimated 206 trillion cubic feet (TCF) of gas reserve in Nigeria, and the subsequent declara-tion of a “Decade of Gas” initiative by the administration of former President Muhammadu Buhari, attention shifted to gas as an alternative to fuel, especially because of its less pollutant capacity.

While most Nigerians may not have embraced this direction, the removal of petrol subsidy by the President Bola Tinubu administration may have opened another vista of acceptance opportunity for gas usage. With petrol selling for between N488 and N600 across the country and the erratic electricity situation, Nigerians are converting to the usage of gas to power their otherwise fuel (petrol or diesel) generators.

The shift

 According to findings, conversion of fuel powered generator to gas powered ones is not really a new technology, but has only been made popular by the present times. Other factors like the looming hike in electricity tariff and rising inflation may have also influenced the rise in the shift to this direction as Nigerians look to cutting costs by converting their petrol-powered electricity generating sets to the far cheaper liquefied petroleum gas (LPG) or cooking gas.

 Experts said the advantages include that it is cheaper to use LPG than petrol, including that it guarantees cleaner environment. A gas merchant in Ojodu, Lagos, Abel Onasanya, explained: “It is cheaper which is the main consideration now; it is cleaner and doesn’t produce the black smudge which burning fuel would produce; it is less harmful to your generating set and won’t damage its parts quickly and it is not as noisy as the fuel-generated.’’

Conversion

 In an online video that went viral recently, a Gombe-based generator technician, Abdukar Sulaiman, explained that converting a generator to function with gas involves changing the original fuel carburetor in the generator to a hybrid carburetor. The later allows a generator to function on  fuel and gas. He said the hybrid carburetor is replaced with that of the generator and then a hose is connected to the carburetor, linking it to a refilled gas tank.

 “It is not a new innovation. It has been in existence for a long time. Most people only discovered it with the recent fuel price hike. It is cost-effective because, if you, for instance, compare using five kg of gas and five litres of petrol, the former can last for a week and the latter can last for just five hours. That depends on the load attached to them, though,” he explained.

 Comparing the functions of a fuel-powered generator with that of gas, the expert said there is only a slight difference in the function, saying: “Both function almost in the same way, but that of gas lasts  longer.”

Safety concerns

 But there are divergent views on the safety of gas powered generator usage. Experts maintained that converting petrol-powered generators to gas-powered ones might not be dangerous, except for usage of compressed natural gas (CNG), how it is used, including installation, placement, maintenance, among others, could make it dangerous.

 The Permanent Secretary of the Ministry of Energy and Mineral Resources, Shola Shasore, an engineer, warned that converting a petrol generator to use alternative and less expensive fuels might require modifications and the installation of appropriate conversion kits by qualified professionals.

 Shasore said: “The public is hereby advised to engage only qualified technicians for this service. When, in doubt, please contact the Lagos State Ministry of Energy and Mineral Resources or Lagos State Safety Commission for guidance on professional vendors and installation as well as appropriate safety guidelines.”

 The President, Nigeria Liquefied Petroleum Gas Association (NLPGA), Felix Ekundayo, explained that LPG is similar to other fuels used regularly, though cleaner fuel compared to petrol.

 According to him, the perceived risk in using LPG for generators is more of a human handling issue rather than a problem with the fuel. He stated that LPG, when handled well, is as safe as petrol. He compared the handling of LPG for generators to its use in homes for cooking and kitchen tasks, highlighting that there is no difference.

 “As more people are using LPG for cooking, the transition to using it for generators poses no issue. The prevention of gas leaks can be achieved by ensuring the use of appropriate accessories. These accessories encompass regulators, hoses- which should undergo regular checks and replacement every  three years; valves, cylinders and clips used to secure the gas until it is ready to be ignited,” he admonished, adding that the same level of safety measures employed for cooking with gas should also be maintained for using gas in generators and other appliances.

There are fears that renewed oil exploration by oil majors may derail the planned actualisation of net zero emission in the energy sector by 2050. The surge in crude oil price, including the profit margin from oil and gas from renewable energy, is also an attraction for drilling. But the International Renewable Energy Agency, in a report warns of the process going off-track. MUYIWA LUCAS reports.

The International Renewable Energy Agency (IRENA) has released its World Energy Transitions Outlook 2023: 1.5°C Pathway report, revealing that the global energy transition is off-track. It added that the aftermath of the COVID-19 pandemic and the ripple effects of the Ukraine crisis have further compounded the challenges facing the transition.

This was revealed in the IRENA’s first volume of the 2023 Outlook at the weekend. The report provided an overview of progress in the global energy transition by tracking implementation and gaps across all energy sectors. The outlook also identified priority areas and actions based on available technologies that must be realised by 2030 to achieve net zero emissions by 2050.

This revelation is an indication of a setback for the energy transition target. As it stands today, renewed drilling efforts by oil majors searching for new deposits, as they reinvest some of the record profits from the fossil fuel price surge driven by the Ukraine war, remain an albatross.

The exploration revival, especially by European majors, stakeholders believe, represents a renewed commitment to oil and gas operations, after Shell and BP may have reneged on pledges to reduce output and invest in renewables as part of the energy transition initiative.

The renewed rush for oil and gas reserves and production is seen in the industry as a big turnaround for BP, which got rid of many staff members from its exploration unit three years ago. Exploration is a long-term, high-risk business. Big-ticket offshore projects typically take five years to develop from discovery and at least another 10 years to return the initial investment.

Profitability

In terms of profit margin, oil and gas operations provide a good return on investment. It is said to have proved more reliable for the energy majors than the very different business model of producing renewable energy. Upstream oil and gas has historically had returns of around 15 per cent to 20 per cent while most renewables projects have delivered about eight per cent.

For instance, Brent Crude Oil, ICE Futures Europe, 1st nearby future (LCOc1) and gas price rally driven by energy producer, Russia’s invasion of Ukraine, translated into record profits for energy majors. The LCOcl is a financial instrument that is traded on the Intercontinental Exchange (ICE) in London, and represents a contract for the future delivery of Brent Crude Oil at a specific time and price. This has increased confidence in the most-costly, high-risk offshore exploration that can also deliver the highest rewards. It responds to pressure from a majority of investors to maximise their oil and gas profits rather than invest in lower margin renewable energy businesses, according to data and industry executives.

This position has been endorsed by leading industry data providers and consultancies. For instance, an analysis of data from oil services firm, Baker Hughes showed that the number of offshore drilling vessels used to explore and produce oil and gas recovered in May to pre-pandemic levels, rising by 45 per cent from October 2020 lows.

Similarly, analysts at Wood Mackenzie have also predicted a continued increase in activity, forecasting offshore exploration and drilling activity to grow by 20 per cent by 2025.

Already, the rise in drilling has helped to drive daily rates for leasing drilling rigs to the highest levels since a 2014 downturn when commodity markets crashed.

“Higher oil prices, the focus on energy security and deep water emissions’ advantages have supported deep water development and, to some extent, boosted exploration,” Wood Mackenzie analyst Leslie Cook said.

Increasing activities

Yet, the potential size of offshore deposits can ensure economies of scale, meaning less energy is used to extract each barrel, limiting emissions.

The International Energy Agency (IEA), forecasts global upstream oil and gas investments are set to increase by around 11 per cent to $528 billion in 2023, the highest level since 2015.

Wood Mackenzie meanwhile predicts the commitment of up to $185 billion to develop 27 billion barrels of oil reserves, with international oil companies focused on the higher-cost, higher-return deepwater developments.

It also anticipated the “Golden Triangle”, comprising of U.S. Gulf of Mexico, South America and West Africa – as well as part of the Mediterranean will account for 75 per cent of global floating rig demand through 2027.

Nambia, which has yet to produce any oil and gas, has attracted strong interest after Shell and TotalEnergies made discoveries off the coast of the southern African country.

Shell’s head of upstream Zoë Yujnovich said last month that results from drilling tests so far were encouraging. Together with its partners QatarEnergy and Namibia’s national oil company, Shell plans to drill two further wells in Namibia by the third quarter of this year. Shell, it is also believed, has also applied for a licence to drill another 10 exploration and appraisal wells there.

TotalEnergies made an oil discovery in February 2022 in the Venus well in Nambia’s Petroleum Exploration Licence (PEL) 56, which analysts at Barclays estimate holds three billion barrels of oil equivalent (boe). Shell reported discoveries in the Graff, La Rona and Jonker wells in PEL 39, which together are estimated to hold 1.7 billion boe, according to Barclays. As it tries to reverse a decline in oil and gas output after it shifted to renewables, BP has turned to the Gulf of Mexico and far off the eastern coast of Canada, where it is ramping up oil exploration activity in frontier prospects.

Concerns

IRENA’s 1.5°C scenario, set out in the World Energy Transitions Outlook, presented a pathway to achieve the 1.5°C target by 2050, positioning electrification and efficiency as key transition drivers, enabled by renewable energy, clean hydrogen, and sustainable biomass.

The report emphasised that the attempt to limit global warming to 1.5°C requires cutting carbon dioxide (CO2) emissions by around 37 gigatonnes (Gt) from 2022 levels and achieving net-zero emissions in the energy sector by 2050.

It said that despite some progress, significant gaps remain between the current deployment of energy transition, technologies, and the levels needed pledges to achieve the goal of the Paris Agreement to limit global temperature rise to within 1.5°C of pre-industrial levels by the end of this century. The agency’s report also added that 1.5°C compatible pathway requires a wholescale transformation of the way societies consume and produce energy.

IRENA noted that the developed nations’ pledged to take significant steps to reduce greenhouse gas emissions and transition to a low-carbon economy and plans fall well short of IRENA’s 1.5°C pathway and will result in an emissions gap of 16 Gt in 2050.

It said: “Nationally Determined Contributions (NDCs), long-term low greenhouse gas emission development strategies (LT-LEDS) and net-zero targets, if fully implemented, could reduce CO2 emissions by six percent by 2030 and 56 percent by 2050, compared to 2022 levels.

“However, most climate pledges are yet to be translated into detailed national strategies and plans – implemented through policies and regulations – or supported with sufficient funding.

According to IRENA’s Planned Energy Scenario, the energy-related emissions gap is projected to reach 34 Gt by 2050, underscoring the urgent need for comprehensive action to accelerate the transition.

IRENA further stated the annual deployment of some 1 000 GW of renewable power is needed to stay on a 1.5°C pathway.

It said: “In 2022, some 300 GW of renewables were added globally, accounting for 83 per cent of new capacity compared to a 17 per cent share combined for fossil fuel and nuclear additions.

“Both the volume and share of renewables need to grow substantially, which is both technically feasible and economically viable.”

The international renewable energy agency also noted that policies and investments are not consistently moving in the right direction.

It added that, while there were record renewable power capacity additions in 2022, the year also saw the highest levels of fossil fuel subsidies ever, as many governments sought to cushion the blow of high energy prices for consumers and businesses.

The agency further hinted those global investments across all energy transition technologies reached a record high of USD 1.3 trillion in 2022, yet fossil fuel capital investments were almost twice those of renewable energy investments.

It said, “With renewables and energy efficiency best placed to meet climate commitments – as well as energy security and energy affordability objectives – governments need to redouble their efforts to ensure investments are on the right track.

IRENA, therefore, emphasised that every year, the gap between what is achieved and what is required continues to grow.

It said, “Significant acceleration is needed across energy sectors and technologies, from deeper end-use electrification of transport and heat, to direct renewable use, energy efficiency and infrastructure additions. Delays only add to the already considerable challenge of meeting IPCC-defined emission reduction levels in 2030 and 2050 for a 1.5°C trajectory (IPCC, 2022).

IRENA, therefore, noted that this lack of progress will also increase future investment needs and the costs of worsening climate change effects. It added that every fraction of a degree in global temperature change can trigger significant and far-reaching consequences for natural systems, human societies and economies. Limiting global warming to 1.5°C requires cutting carbon dioxide.