EXCLUSIVE: Russia-Ukraine War: Report identifies risks in expansion of Nigeria’s gas production

As African gas demand increases in Europe, new research by an international non-governmental organization – Stakeholder Democracy Network (SDN) – Nigeria has identified the socio-economic challenges it may face in its plans to expand gas production.

After the ongoing war between Russia and Ukraine and the energy crisis in Europe and the United Kingdom, due to the interruption of gas supplies from Russia, African gas resources are said to be the perfect substitute for troubled countries.

Nigeria, with the largest gas reserves in Africa and the second largest exporter in 2021, is expected to be the main source of the required gas.

But after an in-depth study of the oil and gas sector in Nigeria’s oil-producing Niger Delta region, SDN called on the Nigerian government to be cautious in its expansion plans, “to avoid diverting resources away from sustainable infrastructure, delaying the transition to clean energy, and increasing dependence on fossil fuels, demand and as prices fluctuate, assets that will be difficult to pay for and debt may be impaired.’

The statement issued by the SDN and the full report, copies of which were exclusively obtained by PREMIUM TIMES ahead of the public presentation on Tuesday (today) criticize what the organization describes as the “current weak system of enforcement of oil and gas rules and regulations”. sector”.

The report, titled: “Gas Expansion and Energy Transition in Nigeria and the Niger Delta”, said the country’s enforcement of standards and regulations has allowed oil and gas companies to “continue to operate without due care”.

As an example of the effect of weak enforcement of rules and regulations, the report identifies the malfunctioning of the Obiafu-Obrikom gas plant in Rivers State run by Nigeria Agip Oil Company, a subsidiary of Italian oil major Eni.

The report said that the findings around the facilities “generally show gas leaks in pipes that are poorly installed, not properly maintained, above ground and near roads and settlements”.

“When we revisited the gas leaks six months later, the leaks continued, despite obvious attempts to patch them up. There was also an explosion in the gas installation during the investigation, which seems to be common,” he added.

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SDN also said it had seen slow responses from oil companies and government regulators to gas leaks and explosions, “and poor techniques to stop leaking infrastructure and mitigate future problems.”

The group added that its researchers found: “Continuous flaring of the gas, which contributes to toxic air, water and land. The community also claims that NAOC is dumping toxic waste and has not removed any abandoned assets.

“Visibly polluted waterways, farmland and air, making them economically unproductive for sustainable livelihoods of farming, fishing and hunting.”

He said residents of the community face serious health impacts, “including cancers, eye, bronchial, rheumatic, neurological, cardiovascular, developmental and reproductive disorders.”

NAOC denies the allegation

However, the NAOC has denied the allegations but said it will not comment officially until the report is released.

An official of the oil giant, who asked not to be named, told PREMIUM TIMES that the leak pipes identified may belong to other gas companies.

The source said other companies including Nigeria Liquified Natural Gas Limited also have pipelines in the same district.

“So we would like to wait for the full presentation of the investigation, so that we have full knowledge of what it is about,” said the official.

Meanwhile, SDN said it contacted the NAOC in its investigative work and the company’s District General Manager, identified as Geordano Crema, responded to the communication about its findings and the allegations were denied.

SDN said in one of its responses, the NAOC said that “any spill is referred to regulators for a joint inspection involving the regulator, the company and representatives. [the] concerned community,” adding that “more than 95 percent of spills/gas leaks in flowlines in the area since 2018 have been due to sabotage.”

Reasons for research

Headquartered in the United Kingdom, SDN, which has been operating in the Niger Delta region of Nigeria for 19 years, said it has plans to expand the use of gas in the country and its growing interest in gas products in Europe and the United Kingdom. He said it was necessary to know the capacity of the nation to meet the demands.

According to the report, as of 2021, “Nigeria was the fourth largest source of liquefied natural gas for the EU and UK (14% of total supply); At least 40 percent of the liquefied natural gas (LNG) produced in Nigeria is exported to Europe, and there are discussions to increase investment and exports.”

Nigeria’s LNG Limited is reportedly planning an expansion with the construction of Train 7, which is expected to increase total national production by 35 percent, while $3 billion in debt has been raised to finance the work.

“Although the planned completion is not until 2026, it is the first additional train since 2007, and the feasibility studies of the 8th Train are being carried out. Other processing facilities include a $700 million plant being built by Seplat and the Nigeria Gas Company joint venture, which is expected to be operational in 2023. Another notable project is the proposed $20 billion Brass LNG plant, which is awaiting a final investment decision, and a planned 30 percent capacity addition on top of NLNG Train 7,” the report said.

SDN said it is necessary to investigate the current state of activities in the region and the nation’s ability to sustain the potential consequences of the planned expansion.

More discoveries

According to SDN, “Partial increases in Nigeria’s gas capacity are expected in the coming years. But further expansion will require billions of dollars of investment and may take decades to get underway, by which time global demand will decline, expected to peak by 2040 and possibly earlier.”

The report, however, noted that the expansion, if done prudently, could still benefit Nigeria as it “seeks to increase domestic gas consumption as part of development goals and as a transition fuel.”

“But (Nigeria) risks diverting resources away from sustainable infrastructure, delaying the clean energy transition and increasing dependence on fossil fuels, which could lead to impaired assets and debt that will be difficult to repay as demand and prices fluctuate.” add

Recommendations

As part of its recommendations, the SDN advises Nigeria to proceed with caution in “gas developments, conduct a thorough risk assessment of gas expansion and update long-term energy transition strategies to minimize impacts, phase out oil and gas assets, and begin oil and gas investing for the post-future’.

It also advises that European countries investing in increased gas production and/or export from Nigeria “also invest in access to renewable energy in Nigeria, especially in communities hosting oil and gas facilities.”

“The Federal Government of Nigeria should improve enforcement of regulations on construction, operation, maintenance, decommissioning, emergency response and divestment of facilities and development of the host community; and require a study on the impacts of gas production on the host communities, with a view to mitigating and remediating those impacts “Design takeovers and hold companies with poor performance accountable,” he advised.

It speaks SDN

Commenting on the report, SDN Acting Country Director Florence Ibok-Abasi said the health and environmental impacts associated with fossil fuel production have been documented for decades but largely ignored by stakeholders in favor of profits.

“We are particularly concerned that increased demand for Nigeria’s gas resources will exacerbate this situation and continue to deprive the country of a clean energy transition. The Nigerian government can no longer afford to pay lip service and must act to demonstrate its commitment to providing clean energy and economic diversification away from oil and gas,” he said. Mrs. Ibok-Abasi.