On June 24, 2022, the African Energy Chamber (www.EnergyChamber.org) planned and sponsored an exclusive roundtable chat with H.E. Chief Timipre Sylva, Minister of State for Petroleum Resources of Nigeria, who gave insights into the most recent developments in the nation’s oil and gas sector.
Nigeria’s oil output has recently been declining. What are the primary obstacles driving this, and what initiatives is the ministry putting into practice right now to deal with these declines in 2022?
A confluence of factors is to blame for the current slump. We had COVID-19, and as the epidemic was ending, the Russian-Ukrainian war broke out, complicated matters for the oil industry of the country just as Nigeria was about to hold elections.
We are working to modernize the nation’s oil industry. It took us a long time to update our out-of-date laws, which had been in place since 1969 but could no longer support the sector.
However, we think we are prepared for investment now that the Petroleum Industry Act (PIA) has been passed. Sadly, now that we are prepared, interest in the oil sector is declining due to a number of factors, including the energy shift.
But now that the regulatory institutions made possible by the PIA are in place, we are observing interest from investors in Nigeria and foreign companies like Shell, Chevron, and ExxonMobil who have committed to making additional investments in the offshore sector as some of these firms move away from onshore operations.
OPEC decided to increase production until August at its early June meeting. What will happen after August, and what is Nigeria’s unique stance with OPEC?
Currently, the prices are reasonable, and we do not anticipate any surprises above the standard price that we have established. Although there is relatively little extra capacity that can be introduced to the market, OPEC is likely to increase output.
Nigeria is in a bad place right now, and our major problem right now is that we can’t meet our own OPEC standard. We have allocated ourselves a month to fight oil theft, which is our current top priority.
We want to bring more of these wells online so that by the end of August, we can produce as much as OPEC demands of us because to COVID-19’s impact on well availability.
Nigeria has been pushing for the Trans-Saharan gas pipeline to be a significant supplier as Europe searches for alternative gas suppliers. How likely is it to start up, particularly in terms of funding?
Especially now that Europe is prepared to use our gas, we are quite prepared for the project. In Nigeria, 614 kilometers of the pipeline have already been built. Algeria also began building.
We need to connect between the northernmost tip of Nigeria, Niger, and Algeria.
We are currently conducting a feasibility study. We have spoken with many European businesses and nations in relation to funding, and we will receive funding for the project from Europe.
We met with Algeria and Niger in Abuja to talk about gas supplies, and as the energy transformation and gas demand both grow, we are eager to advance to achieve our deadline.
Where do you see the greatest capital restrictions, given that the energy transition has made financing more difficult and that this is a significant issue around the world?
In Nigeria’s oil and gas industry, capital is our biggest bottleneck. The globe is moving quickly toward renewable energy, so we have issues with investment from everywhere.
But now, everyone is accepting the necessity of continuing to use fossil fuels.
For instance, gas and nuclear power are being considered as clean energy sources in Europe. As a result, the financial restrictions will eventually loosen up.
Because so many people in Africa need access to energy and because hydrocarbons will help us achieve SDG 7’s aim of ensuring that everyone has access to reliable energy, Africa is not ready to abandon oil and gas.
We have determined that financing for African energy advances will come from financial organizations with a presence in Africa, such as the African Energy Bank that the African Petroleum Producers Association is working to establish.
Due to the favorable fiscal terms, international oil corporations are becoming more interested in offshore investment. We will attract additional finance from international partners if we maintain favorable fiscal arrangements.
What is the state of the projects in Bonga South West? Has anything changed?
A slight slowdown has occurred. According to Shell, the north is simpler to develop than the south. We have been in more frequent contact with the energy major regarding both gas and Bonga North, where they wish to concentrate initially.
What function does deepwater gas serve in Nigeria? Do businesses who desire to manufacture have any incentives?
After talking about it, Equinor requested that the PIA include the terms. We will approach this on a case-by-case basis, and we are pleased to offer them and other companies that are willing fair conditions. With Shell, we accomplished this and had a productive relationship.
The need for hydrocarbons is growing, and efforts are being made to increase gas access to energy throughout Africa. How do you intend to accomplish that using gas?
Hydrocarbons will be needed by Africa to produce electricity. We decided to manufacture and expand access to electricity using gas.
A large gas turbine in Abuja is one of the projects we are implementing in Nigeria; this was previously unimaginable due to the lack of a gas supply.
We have a company looking to invest in an energy island up north.
Through the Ajaokuta-Kaduna-Kano (AKK) Natural Gas Pipeline, the project will essentially transfer gas from the south.
Due to access to gas from the AKK, many industries that had shut down are now reopening, and with gas, we will be able to solve our energy concerns.
More gas turbines, gas grids, and pipelines are being built from Nigeria south to Lagos, and these pipelines are being taken outside of Nigeria.
For instance, we have a pipeline between Nigeria and Togo that we will expand to Morocco in order to facilitate the production of power. We are glad that the world is redefining gas as a clean fuel, but we cannot transition swiftly to renewables because we are not prepared.
With increased exploratory activities and improved financial conditions in the PIA, we plan to grow our gas reserves from 200 trillion cubic feet (tcf) to 600 tcf.
We want to talk with investors who are ready to restart projects like the Lokola liquefied natural gas project because we have reserves to support investments.
One of the OPEC members taking part in the October African Energy Week is Nigeria. What message will you convey to the relevant parties and what agreements would you like to see ratified?
Although there are many transactions on the table, it is too soon to state that we have agreements.
We’ll revisit the Trans Sahara Gas Pipeline debate and agreement. Additionally, we have selected 20 crucial gas projects in Nigeria that we will either discuss or agree to.
As a result of the Decade of Gas strategy, we are concentrating on gas moving forward, and the PIA now clearly outlines our gas fiscal provisions.
The government promotes investment, and we collaborate with financiers to launch these gas projects.