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BusinessDay 14 Feb 2018

Wednesday

Wednesday 14 February 2018 gas Brief Nigeria: NLNG MD says Nigeria must be gas-ready for the future KELECHI EWUZIE C002D5556 BUSINESS DAY 03 WEST AFRICA ENERGY intelligence How equipped is Nigeria to attain the year 2020 gas flare exit target The Managing Director of Nigeria LNG Limited (NLNG), Tony Attah, at the 2nd West Africa International Petroleum Exhibition and Conference (WAIPEC) in Lagos, said Nigeria must unleash its gas potentials, and support NLNG’s expansion programme, Train 7 project, in preparation for a world that is fast making efforts to reduce its fossil fuel consumption and minimise carbon footprint. In a presentation titled “Global Energy Transition: Which way forward Nigeria?” to oil and gas chief executives and experts, Attah remarked that the global energy landscape is changing with major concerns for the environment, such as global warming, and increasing demand for cleaner energy. He remarked that with reduced appetite for crude oil as a dependable source of energy, gas is the best option for Nigeria in the future. He said: “The best bet for Nigeria is gas. It is available in abundance and three times cleaner than oil in terms of carbon content. Nigeria has to begin to think about the relevance of oil in the future. Mozambique: Mozambique approves Anadarko’s $20 billion natural gas plan Mozambique’s council of ministers approved the development plan for Anadarko Petroleum Corp.’s liquefied naturalgas project in the north of the nation, an investment estimated at about $20 billion. The government announced the decision in a statement. The next major requirement that the Anadarko-led consortium has to meet before reaching a final investment decision on the Area 1 project is to sign enough sales and purchase agreements, according to the company. Anadarko and its partners have agreed the price and volumes for 5.1 million metric tons a year of gas production, out of the 8.5 million tons required to reach financial close, the company said in a statement. During the last quarter of 2017, it signed an agreement with Tohoku Electric Power Co. of Japan to sell it gas. The issue around gas flaring is a fight successive government in Nigeria has struggled to tackle. While government after government set out projections and targets concerning exiting gas flaring, the challenge however has always been the lack of political will to fully implement such targets. Reports show that the Nigerian government had previously set 2020 deadline to end gas flaring, which is ten years ahead of the 2030 deadline set by the United Nations for the world to exit gas flaring. Nigeria was previously the worst gas flaring nation in the world after Russia, but a number of Clean Development Mechanism, (CDM), projects aimed at appropriate gas utilisation have helped the country improve its standing in the global gas flaring chart to the sixth position. The result of this flaring action is that Nigeria has been incurring losses in terms of revenue that would have accrued from the flared gas. Statistics show that last year, the country lost an estimated $76.59 million (about N23.74 billion) per month as oil and gas companies operating in the country flared 25.53 billion standard cubic feet (SCF) of gas monthly. Emmanuel Ibe Kachikwu, Minister of State for Petroleum Resources, however, said recently that Nigeria is now about 70 percent compliant on gas flare exit. The implication of this according to him, is that Nigeria is now utilising about 70 percent of the gas produced by oil firms in the process of crude oil production in one form or the other, including liquefaction and export, supply to power generating plants and for re-injection; while only about 30 percent is flared. Kachikwu said the plan by the Federal Government is “to take away the remaining 30 percent within the 2020 deadline, adding that as part of efforts to effectively harness the nation’s abundant natural gas resources, the government would shift focus from oil to gas. He further assured that government will change the dynamics from being an oil-producing country to being a gas producing country, because that is really what we are. Analysts advocated for a strategic implementation of an agenda that will see to the monetisation of Snapshot 25.53Bscf Estimated amount of gas flared in Nigeria monthly flared gas. They observed that daily, Nigeria flares around 755 million standard cubic feet per day. According to them, “Do you know how much we lose as a country, the carbon credit we would have gotten from this, the electricity we would have generated, the LPGs (liquefied petroleum gas) and the likes of those, even if they had have to go to any of the LNG (liquefied petroleum gas) trains” Maikanti Baru, group managing director, Nigerian National Petroleum Corporation (NNPC) reiterated the commitment of Nigerian Petroleum Development Company (NPDC) as the highest gas supplier to Nigerian domestic market to the reduction and elimination of gas flaring to generate more revenue for the country. He said the NNPC had put in place measures and facilities to curb gas flaring preparatory to the 2020 flare out deadline by the Department of Petroleum Resources (DPR). The government announced the existence of 178 gas flare sites in the country as it lamented the burning of money that would have been used to generate wealth, create employment and also generate electricity for the people.

Wednesday 14 February 2018 04 BUSINESS DAY C002D5556 WEST AFRICA ENERGY intelligence Brief power Africa: Financial services provider invests $36m in solar developer West Africa needs to brace up for power disruption trends ISAAC ANYAOGU A report by Deloitte indicates that low levels of power supply among other things are a deterrent for many intending investors across various sectors in Africa especially in West Africa. According to the report, the power industry continues to be bedevil by challenges such as inadequate generation capacity, poor transmission infrastructure, unskilled Snapshot 488kWh Estimated average annual electricity consumption for sub-Saharan Africa or low numbers in the skilled workforce, poor maintenance of existing power stations, as well as poor metering and billing systems resulting in unreliable supply, countries will need to innovate to achieve financially viable growth in the sector. The report further shows that these challenges coupled with a changing landscape in terms of technologies and the costs thereof, are giving rise to a number of ‘disruptors’ in the sector, inspiring a shift away from traditional generation practices and mixes, methods of operations and systems, funding channels and models, as well as the landscape of players and stakeholders, towards the application of new and innovative technologies and dynamics in power infrastructure. Those who know in the industry acknowledge that power and energy sector is a critical driver of growth and development across the region adding that in order to ensure that the industry reaches its full potential and addresses the energy needs of citizens, it is necessary for West Africa region to keep up to date with a rapidly changing landscape. Analysts observe a growing push by some West African countries to deploy gas to fuel power plants. To them, with the low cost of gas more latterly compared to several years ago, gas powered plants have increasingly become more competitive. Connecting renewable energy onto the grid is becoming more affordable as West Africa is blessed with abundant natural resources. They maintain that it stands to reason that it is this dynamic that will ultimately impact on and alter the power landscape in the region. While West Africa has typically lagged behind developed markets in the uptake of renewable energy, this will become a feature of the past as appetite for renewable energy increases. It is well documented that countries in the region have endured challenges in the past with providing their citizens with electricity as a larger percentage of people across the region are still without power, illustrating that much still need to be put in this space. Analysts are of the views that with the rise of trends like decentralised distributed generation, closing that gap will become more easily achievable. According to them, “Distributed generation has the ability to bring more citizens into the energy fold through the building of smaller power stations at specific load centres, rather than building bigger, centralised stations that need to transmit power long distance”. To them, this also assists in reducing transmission losses as power would not need to be evacuated over long distances. The introduction of multiple, smaller grids can substantially assist in transmitting power to where it is needed, bringing down the number of people without electricity. There are huge opportunities in the decentralisation of renewable energy and businesses and countries that embrace the shift and invest in the space will yield good returns. Cape Town-based investment management business, Inspired Evolution, has struck a deal to invest up to $36 million into solar developer Alten RE Developments Africa BV (Alten Africa) and its 225MW power portfolio of solar projects in sub-Saharan Africa. The $36million investment will be made through Inspired Evolution’s Evolution II Fund. Initially the partnership will aim focus on 500MW of advanced and pre-permitted solar projects. Among those will be the 45.5MWp Hardap solar project in Namibia, expected to achieve financial closure this month, the 51.5MWp Kesses 1 scheme in Kenya and the 125MWp Middle Band Solar One project in Nigeria. Europe: Renewables overtake coal for first time in Europe Wind, sun and biomass have overtaken coal as a source of supply for Europe’s electricity for the first time in history, according to a climate change policy think tank, Sandbag. The report entitled The European Power Sector in 2017 showed that new renewables generation sharply increased in 2017. Since Europe’s hydro potential has been largely Speaking about the newly-formed collaboration, Christopher Clarke, managing partner at Inspired Evolution said: “Together we offer the aggregation of regional and international market knowledge, multidisciplinary skills and credentials with over 1 GW of collective clean energy track record.” Inspired Evolution has invested in 913MW of clean energy infrastructure projects. tapped, the increase in renewables comes from wind, solar and biomass generation, which rose by 12 percent in 2017 to 679 terawatt-hours, placing these renewables sources above coal generation for the first time, the report showed. “This is incredible progress, considering just five years ago, coal generation was more than twice that of wind, solar and biomass,” the report revealed. According to the report, Germany and the UK alone contributed to 56 percent of the growth in renewables over the past three years. “There is also a bias in favor of wind: a massive 19 percent increase in wind generation took place in 2017, due to good wind conditions and huge investment into wind plants.