Malabo declaration and future of energy in Nigeria, others
In the era of energy transitions, introduction of discriminatory regulations against cleaner hydrocarbon fuels such as natural gas, disturbs gas markets design, undermines investment in crucial gas infrastructure and new gas supply projects.
Gas is the future of Africa, Africa is the future of gas. With many discoveries in the continent, the need to explore gas for domestic development, especially as it relates to electricity and industrial growth, is one of the key hallmarks of the Malabo declaration from the Gas Exporting Countries Forum (GECF) 5th Gas Summit. FEMI ADEKOYA writes.
NATURAL gas has been described as a transition fuel that is ‘environmentally friendly, affordable, reliable, accessible and flexible.’ As countries face mounting pressure to reduce carbon emissions, natural gas has emerged as the great compromise between industry and environmental activists.
It is less polluting than other fossil fuels but also potent, cheap and abundant enough to drive economic development. A case in point is the United States, whose energy-related carbon emissions were 12 percent lower in 2018 than in 2005 while the economy grew by 25 percent. Reduced reliance on coal in favour of surging natural gas consumption is attributed to have contributed to that reversal.
With nearly two-thirds of the continent lacking access to electricity and most countries depending on expensive fuel imports, there are calls to increase energy spending and explore hydrocarbons for domestic growth rather than solely trading such.
Drafted during a week of Ministerial and High-level Ad Hoc Working Group meetings, the document reaffirms the importance of retaining sovereign rights of member countries over natural gas resources; securing an energy transition and meeting sustainable development goals; attracting investment to gas infrastructure projects; fostering coordination among GECF member countries; and establishing pricing mechanisms, among other key objectives.
“One of the positions of the GECF is to specifically designate the terms and conditions of the contracts between producers and consumers. Our community insists that pricing connected to oil indexation should serve in favour of our member countries,” says Yury Sentyurin, Secretary-general of the GECF.
He added that: “Producers need to have a reliable flow of revenue to be able to ensure investment. With the connection between pricing and indexation, we try to ensure comfortable conditions for producers to ensure that their projects are implemented.”
The Declaration of Malabo builds on the existing frameworks for cooperation outlined by the declarations of GECF Summits held in Doha, Qatar (2011), Moscow, Russia (2013), Tehran, Iran (2015) and Santa Cruz de la Sierra, Bolivia (2017).
According to the GECF, gas will be the only fossil fuel to increase its market share until 2050 and Africa will make a big contribution, more than doubling its gas production over the next 20 years.
Achieving a real quantum leap and breaking the ‘gas ceiling’ will demand Africa’s version of the New Silk Road – a trillion-dollar idea that calls for new exploration, import and export infrastructure, processing plants, downstream and power facilities and gas utilization technologies.
Sentyurin said natural gas will be the only hydrocarbon resource to expand its share in the global energy mix from its current 23% today to 27% in a few years, making it a "roundthe-clock traded commodity".
Addressing the 5th Summit of Heads of State and Government of the GECF Member Countries at Malabo, in Equatorial Guinea, he said the current global energy demand was projected to increase by 30% by 2050.
Fossil fuels are expected to cover approximately 71% of this projected total demand.
The Declaration of Malabo (Natural Gas: Energy for Sustainable Development), which was unanimously adopted, specifically highlights the need to promote the GECF'S co-operation with African countries to use gas as the core source of energy in their development programmes and climate change policies, with the aim to overcome energy poverty, enhance development and mitigate CO2 emissions.
Six GECF African members Algeria, Angola, Eg ypt, Equatorial Guinea, Libya, and Nigeria dominate in total gas production in Africa. Collectively, they contributed 213 bcm to marketed gas production in 2018, and accounted for 93% of the total gas produced on the continent.
Based on the shared opinion that natural gas is good for Africa, the forum is set to promote further co-operation with African countries to use gas as the core source of energy in the development programmes and climate change policies, in delivering energy to the continent’s consumers, more generally in alleviating energy poverty.
President Muhammadu Buhari on his part, said that the Federal Government would soon commence the construction of the 600-kilometre Ajaokuta-kaduna-kano gas pipeline which would move gas from the Southern part of the country to the North.
Describing the theme of the Summit, Natural Gas – Energy for Sustainable Development as most appropriate, President Buhari noted that the one-day meeting was “taking place at a critical juncture as global energy supply is transitioning from hydrocarbons to renewables.”
According to him, “The Paris Accord of 2015 signalled the first major global commitment to a deliberate effort on this inevitable transition,” stressing that “Nigeria is proud to be one of the first signatories” to the historic Agreement.
Explaining why Nigeria and GECF members are focusing on gas development, Buhari said: “We are mindful of the energy deficit in the developing world especially, here in Africa where we have nearly 600 million people without access to modern energy. As responsible leaders, it is our duty to preserve the environment not only for the present but for future generations.
“We can achieve this balance between our energy deficit and environmental preservation needs by developing and deploying new technologies. Although classified as fossil fuel, natural gas is a viable solution to both our energy and environmental challenges.”
President Buhari noted further that “natural gas has the added advantage of availability and affordability,” stressing that, “to fully leverage this potential, nations need to pool resources to put up trans-border and trans-regional energy infrastructure.”
According to him, “We in Nigeria have led the way by the construction of the West Africa Gas Pipeline which runs through four West African countries.”
Given the largest natural gas resources in the world, as well as viable share in gas production and trade, the leading position of the GECF member countries is widely acknowledged on the global energy market.
Recalling the declarations of the GECF summits held in Qatar in 2011, Russia (2013), Iran (2015), and Bolivia (2017), the GECF works to protect the interest of its member countries and to support sustainable development efforts through facilitating access to affordable, safe and clean energy for all.
In the era of energy transitions, introduction of discriminatory regulations against cleaner hydrocarbon fuels such as natural gas, disturbs gas markets design, undermines investment in crucial gas infrastructure and new gas supply projects.
To ensure that Nigeria remains active in the natural gas space, especially with the growth of LPG, the Vice-president, Business Development LPG & Olefins, Argus Media, Alan Hayes stated that new changes in the global market may affect Africa as supply revolution led by the United States continues to disrupt the market and affect prices.
With Nigeria’s geographical location, Hayes said: “Africa sits at an interesting point – between two big trading hubs, and able to trade with multiple regions. The “logical” prices should be the lowest delivered price logistically achievable.
“More often than not, prices in Nigeria are heavily influenced by import prices. There is a real need for a pricing mechanism that genuinely reflects market dynamics in WAF – we hope that our new Index can be part of the solution”.
The Managing Director, NNPC retail, Billy Okoye stated that for the Federal Government to achieve its LPG penetration target, there needs to be an improvement in public transportation infrastructure, as it will go a long way in easing
LPG distribution for the benefit of Nigerians.
“Encouraging private sector development of storage and handling facility for LPG will also boost the sector. Government backed public awareness campaigns on the benefits and advantages of LPG usage will help increase awareness and encourage more citizens to switch from kerosene and firewood use to LPG.
“Finally, providing affordable long-term financing for private sector organizations with the intention of participating in the LPG value chain will provide the much-needed stimulus for this all-important sector of the Nigerian economy”, he added.
With a major resolve to promote natural gas as an affordable, abundant and reliable source of energy by encouraging the expansion of natural gas utilization domestically and internationally in different forms and sectors, operators hope that the Nigerian government will revisit regulations that will attract investments and growth, therefore spurring improved access to electricity in many households and industries for improved productivity and competitiveness.