Do you know that Nigeria is a key contributor to the natural gas export industry not only in Africa but also worldwide? According to Statista rankings in 2023, the country ranked 17th in global gas production after the United Arab Emirates and Uzbekistan.
Nigeria boasts of earning $18.3 billion from natural gas exports, with this figure sourced from reports by the CBN and NNPC. Despite this great potential, the country’s gas industry remains underdeveloped. Could opening it up transform and change the energy landscape of the Nation?
In this article, we would explore the current state of gas-to-power in Nigeria, the challenges it faces, and the innovative solutions CAPSL is paving to ensure a sustainable and efficient energy future.
Why use Natural Gas in Electricity Generation?
- Efficiency of natural gas power plants compared to coal-fired plants: Natural gas power plants generally have higher efficiency compared to coal-fired power plants. This means that less natural gas is needed to produce the same amount of electricity, resulting in lower fuel consumption and emissions.
- Reduced air pollution and greenhouse gas emissions: Natural Gas power plants also emit lower levels of other air pollutants such as sulfur dioxide (SO2) and nitrogen oxides (NOx). These pollutants are major contributors to air pollution and can have harmful effects on human health. Additionally, the use of natural gas in electricity generation produces fewer greenhouse gas emissions which helps to mitigate climate change.
- Cost competitiveness of Natural Gas in electricity generation:
In Nigeria, Natural Gas has been a cost-competitive option for electricity generation when compared to other fossil fuels. However, the price of Natural Gas can be subject to variability due to location, but it’s still arguably the best alternative for generating electricity.
- Low carbon emissions compared to other fossil fuels: Natural Gas power plants emit significantly fewer carbon dioxide (CO2) emissions compared to coal-fired power plants. When burned, natural gas releases approximately 50-60% less CO2 emissions than coal, making it a cleaner option for electricity generation.
- Natural Gas serves as a backup for intermittent renewable sources: Renewable energy sources such as wind power and solar are intermittent in nature, meaning they are affected by the availability of sunlight and wind. Natural Gas power plants can provide backup power during times when renewable energy generation is low, ensuring a stable and reliable electricity supply.
The current state of the Gas-To-Power in Nigeria
Nigeria has the biggest Gas reserves in Africa, but this may not helped its people’s economy or social life in a meaningful way. Several serious issues have arisen as a result of the Nation’s present Gas governance strategy. An estimated 7 billion cubic meters of Gas are flared in Nigeria each year, costing the country over $2.5 billion in lost revenue. Both the environment and human health suffer from the flaring effect, which makes a substantial contribution to local air pollution and greenhouse gas emissions. Despite persistent power outages, just 15% of Nigeria’s gas is used to generate energy. There are still a few gas-based sectors, such as methanol facilities and fertilizer plants, in the industrial sector, which may considerably benefit from a steady supply of gas.
Challenges Hindering the Growth of Gas-to-power in Nigeria
- Inadequate Infrastructure and Pipeline Vandalism: The Nigeria’s natural gas sector is restricted by the lack of infrastructure to monetize gas that is currently flared. Most of the gas pipelines in the country are old, poorly maintained, or vulnerable to vandalism, leading to frequent disruptions in gas supply.
- Gas Supply Shortages: Some of the states in Nigeria still experiences low supply of gas despite the country enormous gas reserves, supply shortages in the gas industry still remain a huge problem factors such as insufficient gas processing facilities and limited pipeline networks reduces the amount of gas available for power generation.
- Policy and Investment Strategies: The government should create dependable policies that encourage private investment and innovation. Creating incentives for renewable energy projects and modernizing regulatory frameworks will attract investors willing to fund sustainable energy projects.
- Poor funding of investments: Delays in the payment of cash have a discouraging effect on the joint venture operators. Poor funding is responsible for the abandonment of the Olokola Liquefied Natural Gas (LNG) project and the Trans-Sahara gas pipeline project.
The Future of Gas-to-Power in Nigeria
As the challenges of gas-to-power become increasingly evident, it’s important to explore new solutions for Nigeria’s energy future. To build a sustainable energy sector, the country must embrace some solutions such as:
- Technological innovations: Advancements in technology can significantly improve the efficiency of gas-to-power systems. Innovations such as advanced gas turbines, carbon capture, and digital monitoring solutions can optimize gas utilization and minimize emissions.
- Good policies that support the growth of the gas industry in the country.
- Adequate funding and investment into the sector: With the right amount of funding and partnerships, businesses can optimize their operations and improve overall productivity. An example of such partnership is a lease-to-own partnership where a business can lease equipment from another and have those equipment maintained over a period of time.
At CAPSL, we understand that the future of Nigeria’s energy sector is bright and if all these challenges are been tackled the gas-to-power industry will boost industrialization in the country, generate more employment, and improve energy security as long as investments in gas infrastructure and technologies keep increasing.
We believe in providing reliable natural gas solutions to help boost the economic growth of the country, Partner with CAPSL today to expand and optimize your business operations.
