the exploitation of natural energy resources in nigeria for accelerated socio-economic development-...

OPTIMIZING THE EXPLOITATION OF NATURAL ENERGY RESOURCES IN NIGERIA FOR ACCELERATED SOCIO-ECONOMIC DEVELOPMENT: STRATEGIES AND

OPPORTUNITIES FOR INVESTMENT*

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*Paper Presented at 2010 Science and Technology Summit, Shehu Musa ‘Yar’Adua Centre, Abuja,

9th-10th August, 2010

CONTENTS

1. Introduction

2. Energy and the Economy

3. Strategies for the Optimum exploitation of Energy Resources in Nigeria

2

Resources in Nigeria

4. Investment Opportunities

5. Challenges and the Way Forward

6. Conclusion

1. INTRODUCTION

• It is a well acknowledged fact that energy is essential for socio-economic development of all nations.

• It is required to power all sectors of the economy.

3

• It is required to power all sectors of the economy.

• Nigeria is endowed with fossil, nuclear and renewable energy sources.

• All fossil fuel resources are depletable.

1. INTRODUCTION Cont’d…

• Renewable energy is replenisheable through natural processes within a relatively short time.

• The National Energy Policy (NEP), approved in 2003 by the FEC, articulates the optimum exploitation of all the FEC, articulates the optimum exploitation of all energy resources in the country in a sustainable manner and with the active participation of the private sector.

4


• Petroleum and electricity are the widely used commercial energy end products in Nigeria.

• For example, petroleum products accounted for 67.4% of the total primary energy consumed in 2008.

• Fuel-wood, a traditional fuel widely and extensively • Fuel-wood, a traditional fuel widely and extensively used by the rural and peri- urban dwellers, is hardly considered commercial, largely due to its non-export status.

• Although all forms of energy can be transformed into electricity, however, there is a huge disparity in electricity demand and supply in Nigeria.

5

• Though the demand and supply imbalance for fuel petroleum products is presently low, the supply strategy is unsustainable because most of the supply is imported due to inadequate local refining capacity in the country.


• Also fuelwood consumption is unsustainable because supply is diminishing as a result of desertification.

• Large hydropower, has so far contributed about 2,000MW only to the total grid-connected electricity generation capacity in the country.

• Currently solar, wind, small hydro and biomass are yet to contribute significantly to electricity supply.

6

• However, solar, wind and fuelwood have been traditionally employed in:

• open-to-sun drying,

• grinding of grains and

• cooking, respectively.


• cooking, respectively.

• Biomass, and in particular fuelwood, accounts for over 90% of the domestic energy needs of over 70% of the nation’s population, who dwell in rural areas and peri-urban centres.

• While mining of uranium ore has not been started in Nigeria, its mining in the neighbouring Niger Republic has been going on for about two decades.

7

• Use of coal since its discovery in Nigeria has drastically declined.

• The gaps in the nation’s energy supply matrix arise due to the non-implementation of the strategies for the exploitation of our energy resources, as


8

the exploitation of our energy resources, as articulated in the National Energy Policy and its Masterplan.

• The question is: what is the way forward? Before answering this question we need to look at energy/economy interactions and to understand the strategies for energy exploitation and investment opportunities in the energy sector.

2. Energy and the Economy

S/N Resources Reserves Production

(2008)

1 Crude Oil 32.2billion barrels 1.98Mb/day

• a) Fossil Energy Resources

1 Crude Oil 32.2billion barrels 1.98Mb/day

2 Natural Gas 187 TSCF 2.28BSCF/day

3 Coal 2.7 billion tones 0

4 Tar Sands 31 billion barrels of oil equivalent

0

Source: CBN (2009)

9

2. ENERGY AND ECONOMY…Cont’d

• b) Renewables and NuclearS/N Resource Reserve Utilization Level

1 Large hydro power 11,250MW 1,972MW

2 Small Hydro power 3,500MW 64.2MW

3 Solar Energy 3.5kW/mNNNN/day

7.0kW/mNNNN/day

-10MW solar PV stand-alone

-No solar thermal electricity

10

4 Wind 2-4m/s at 10m height -2x2.5KW electricity generator

-10MW wind farm contracted in 2009.

5

Biomass

Fuel wood 11 million hectares of forest and woodlands

43.4 million tones of fuel wood/yr

Municipal waste - 18.3 million tones in 2005 -

Animal waste - 243 million assorted animals in 2001 -

Energy Crops and agric waste

- 28.2 million hectares of Arable land 8.5% cultivated

6 Nuclear not yet quantified 30kW

Source: REMP (2005)* FM ENV

.• c) Energy Production

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Sources: (i) Central Bank of Nigeria (CBN) 2006, 2008)(ii) www.opec.org/library(iii) National Bureau of Statistics (NBS) (2007, 2009)

• *Though Nigeria has a resource of 2.7 billion tonnes of coal, production declined from a peak of 0.91 million tonnes in 1959 to no production in 2001, because of petroleum, which was discovered in commercial quantities in 1956

.• d) Energy Consumption

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Source: Central Bank of Nigeria (CBN) (2006, 2008)

• Petroleum product is widely consumed energy type and the largest amount of that Consumed is imported, despite the country’s status as the largest oil producer in Africa

.• e) Energy, Economy and Social Indicators

S/N Indicator 2003 2004 2005 2006 2007 2008

1 Real GDP Growth (%) 9.6 6.6 6.5 6.0 6.2 6.4

2 a) Major Contributors to GDP*

!Agriculture (%)

.!Crude Petroleum (%)

b) Major Contributor to

Federal revenue (net)

41.010

26.53

40.98

25.72

41.19

25.26

41.72

21.85

42.20

19.35

42.07

17.54


13

Federal revenue (net)

!Crude Petroleum (%) 75.0 77.0 72.4 76.7 67.7 71.8

3 Energy Intensity (kgoe/$) (Energy Consumption/GDP)

0.244 0.186 0.157 0.086 0.063 0.069

4 GDP/Capita (US$) 620.9 673.2 847.4 1,036,2 1,256.6 1,176.1

5 Energy Consumption/Capita (kgoe/capita)

151.3 125.5 132.6 87.1 81.4 80.8

6 Electricity consumption/capita (kWh/capita)

174.6 176.4 181.4 167.6 161.2 142.9

7 Electricity Access (%) 55.2% from 40% in 1993

Sources: CBN (2006,2008),NBS (2009); *GDP is at 1990 Constant Prices

• e) Energy economy and social indicators Cont’d

• Social Indicators

S/N Indicator 2003 2004 2005 2006 2007 2008

8. Population growth rate (%)

2.8 2.8 2.8 3.2 3.2 3.2

9. Adult literacy rate (%) 57.0 62.0 57.0 64.2 64.2 66.9


14

9. Adult literacy rate (%) 57.0 62.0 57.0 64.2 64.2 66.9

10. Incidence of poverty(%)

- 54.4 54.4 54.0 54.0 54.0

11. Life expectancy (yrs) 54.0 54.0 54.0 54.0 54.0 54

13 Unemployment rate(%)

- 13.4 11.9 14.6 10.9 12.8

Sources: CBN (2006,2008), NBS(2009)

• Energy Sector Organizations

!"#$%&#'() NEC

Federal Ministry of Petroleum

Office of Special Advisers

Fed. Ministry of EnvironmentFed. Ministry of

Science & Tech.

Fed. of Ministry Mines &

Steel Dev. (Coal, Tar

Fed. Ministry of Power

PCP


15

of Petroleum Science & Tech.Steel Dev. (Coal, Tar sand, Uranium)

Energy Com.of Nigeria NNRA NAEC

KEY:PHCN- Power Holding Company of Nigeria REA - Rural Electricity Agency (REA), NERC- Nigerian Electricity Regulatory CommissionECN - Energy Commission of Nigeria NDPHC - Niger Delta Power Holding Company NEC - National Energy CouncilNNRA – Nigerian Nuclear Regulatory AuthorityDPR- Department of Petroleum ResourcesNAEC- Nigeria Atomic Energy Commission PPPRA – Petroleum Product Pricing Regulatory AgencyPCP – Presidential Committee on Power

PHCN NDPHC NERCDPR PPPRA

6 Energy Research Centres 5 Nuclear Research

Centres

NNPC &Subsidiaries

15

3. STRATEGIES FOR OPTIMUM EXPLOITATION OF NATURAL RESOURCES IN NIGERIA

Investing in and intensifying crude oil

exploitation and production

Maximizing and expanding the refining capacity in the country to cater fully for local

consumption and export

Taking appropriate measures to ensure that

Nigerians are put into

16

consumption and export of petroleum products

Expanding and promoting research and development

activities in the country

Providing appropriate fiscal incentives to attract investments and ensure reasonable returns. Ensuring adequate geographical

coverage of oil refining and products distribution network

Nigerians are put into key decision-making positions in the oil

industryCRUDE

OIL

3. STRATEGIES FOR OPTIMUM EXPLOITATION OF NATURAL RESOURCES IN NIGERIA ..Cont’d

Encouraging local engineering design and

fabrication of equipment and spares

in Nigeria

Ensuring the availability of adequate strategic reserves of storage

Ensuring the use of locally available

materials, such as CRUDE

Encouraging local engineering design and

fabrication of equipment and spares

in Nigeria

Ensuring the availability of adequate strategic

Ensuring the use of locally available

materials, such as

17

reserves of storage capacity for refined

products for at least 90 days of forward

consumption

Improving the living standards of people in oil producing communities

through the provision of socio-economic infrastructure.

Reviewing existing laws and regulations to create the enabling environment

for increased private sector participation in the oil industry, especially the

downstream

materials, such as bentonite and barytes,

for oil exploration

CRUDE OIL

CONT’D

of adequate strategic reserves of storage capacity for refined

products for at least 90 days of consumption

Improving the living standards of people in oil producing communities

through the provision of socio-economic infrastructure.

Reviewing existing laws and regulations to create the enabling environment

for increased private sector participation in the oil industry, especially the

downstream

materials, such as bentonite and barytes,

for oil exploration

3. STRATEGIES FOR OPTIMUM EXPLOITATION OF

NATURAL RESOURCES IN NIGERIA ..Cont’d

Encouraging the oil-producing companies to gather and utilize associated gas in order to eliminate

flaring Imposing appropriate and

effective penalties to

discourage gas

Providing incentives to encourage

industrial and

18

discourage gas flaring

Encouraging the establishment of the

necessary infrastructure for the effective gathering, transmission and distribution of gas

nationwide

Establishing suitable infrastructure for the export of natural gas

industrial and domestic

consumers to use gas or convert to

gas

NATURAL GAS


Providing incentives to encourage the introduction and use of LPG appliances in areas not accessible to natural gas to encourage the consumer preference

for gas Expanding and promoting gas related R & D outfits in the

Providing necessary incentives to

indigenous and foreign

NATURAL

19

outfits in the country

Formulating suitable urban and regional planning

regulations needed for the effective distribution of

natural gas and its utilization by domestic and

industrial consumers

Ensuring that the price of natural gas is cost

effective, while giving due attention to the effect on

local consumption

foreign entrepreneurs to

facilitate their participation in the

gas industry

NATURAL GAS CONT’D


Undertaking exploration and

exploitation activities for tar sands deposits

in the country Establishing an appropriate

regulatory institution for the tar sands sub-

sectorEstablishing infrastructural

facilities for the acquisition of

20

sector

Putting in place necessary regulations and guide lines

for the exploitation of tar sands

Intensifying R & D in the production of lubricants and other heavy oil products from tar sands

facilities for the acquisition of the technology for harnessing

tar sands TAR SANDS


Establishing heavy oil upgrading facilities near the tar sands

deposits.

Providing appropriate

De-emphasizing the importation of heavy crude oil as a way of

21

TAR SANDS CONT’D

appropriate incentives to

facilitate investment in exploration and exploitation of tar sands resources

Providing an appropriate financing facility to support

indigenous investments in tar sands development.

crude oil as a way of encouraging the

utilization of heavy oils from our tar

sands.


Intensifying the drive for coal exploration and production

activities.

Providing adequate

Providing adequate

incentives to

22

COAL

adequate incentives for the

large scale production of coal stoves at

affordable prices.

Providing adequate incentives to indigenous and foreign entrepreneurs for the

establishment of coal-based industries

incentives to indigenous and

foreign entrepreneurs to

attract investments in

coal exploration and production.


Developing adequate infrastructure for handling and transportation of coal

within and out of the country.

Encouraging R & D in the

Organizing awareness

23

COAL CONT’D

Encouraging R & D in the production,

processing and utilization of

coal.

Re-introducing the use of coal for power generation especially with clean coal

technologies.

awareness programmes for the use of smokeless coal briquettes as

alternative to fuelwood.


Intensifying manpower development in the utilization of nuclear energy for peaceful

purposes. Creating incentives for career

development in

Providing adequate resources to the Nigerian Nuclear

Regulatory Authority

24

development in nuclear science and technology.

Providing adequate resources to the Nigeria Atomic Energy

Commission (NAEC) to promote the use of nuclear energy for peaceful purposes including

nuclear power

Intensifying research and development efforts in nuclear

science and technology.

Regulatory Authority (NNRA) for the

enforcement of nuclear security and safety laws

and regulations.

NUCLEAR


.Fostering co-operation with the International

Atomic Energy Agency

Undertaking regular public enlightenment campaigns on applications of

nuclear technology,

25

Establishing a nuclear radiation surveillance

programme for the protection of the

environment

Identifying accurately the availability and the extent of nuclear and other related mineral

resources.

technology, nuclear safety and radiation

protectionNUCLEAR CONT’D


.

Intensifying research and development in

solar energy technology

Providing adequate incentives to

suppliers of solar energy products

and services

26

Promoting training and manpower development

Providing adequate incentives to local

manufacturers for the production of solar

energy systems

and services

SOLAR


.

Providing adequate resources to the ECN to domesticate solar and other renewable energy technologies

in Nigeria

Setting up and maintaining a

comprehensive information system on available solar energy resources

27

in Nigeria

Setting up extension programmes to introduce solar

technology in to the energy mix

Providing fiscal incentives for the

installation of solar energy systems

energy resources and technologies

SOLAR Cont’d..


Ensuring increased indigenous participation in the planning, design

and construction of hydropower stations.

Providing basic

Establishing and maintaining multilateral

28

HYDROPOWER

Providing basic engineering

infrastructure for the production of

hydropower plants, equipment and

accessories

Encouraging the private sector, both indigenous and foreign, in the

establishment and operation of hydropower plants

multilateral agreements to

monitor and regulate the use of water in international rivers flowing through the

country.


Encouraging the private sector, both indigenous and

foreign, for the local production of hydropower plants and accessories

Promoting and

Ensuring that rural

electricity

29

HYDROPOWER CONT’D

and supporting R & D activities for the local

adaptation of hydropower

plant technologies

Initiating and updating data on the hydro potential of our rivers and identifying all the possible locations for dams

electricity boards

incorporate small-scale hydropower

plants in their development

plans


Encouraging research and

development in wind energy utilization. Developing skilled

manpower for provision of basic engineering

infrastructure for the local production of components

Intensifying work in wind data acquisition and development of

30

production of components and spare parts of wind

power systems

Developing extension programmes to

facilitate the general use of wind energy

technologyProviding appropriate incentives to producers,

developers and consumers of wind

power systems.

Training skilled local craftsmen to ensure the operation and

maintenance of wind energy systems.

and development of wind maps.

WIND


Encouraging R & D in hydrogen energy related technologies

31

Providing incentives to

popularize the use of

hydrogen as an energy

source.

Development of domestic capacity in hydrogen

production and application

technologies.

HYDROGEN


Gathering information on the development of these emerging

technologies.

32

Encouraging R & D in the technologies of the exploitation of these emerging energy resources.

Prioritizing the level of need, level of

technological development and

viability of emerging

renewable energy resources

OTHER RENEWABLES

• i) Electricity:-

• Rehabilitating existing power plants in order to derive optimum power from the installed capacity.

• Completing on-going projects designed to enable the Power Holding Company of Nigeria (PHCN) satisfy the national demand.


demand.

• Reinforcing the transmission and distribution networks necessary to allow consumers to enjoy steady and reliable supply of electricity

• Establishing basic engineering infrastructure for the local manufacture of electrical equipment, devices and materials.

• Encouraging R & D in the generation, transmission and distribution of electricity.

33

• Reducing high import duties paid on generation, transmission and distribution materials.

• Strengthening the National Electricity Supply Training Institute and zonal training centres where the core of the middle level manpower and artisans, various cadres of professional technical officers, operators, linesmen and


professional technical officers, operators, linesmen and cable joiners are to be trained and groomed in the art of operation and maintenance of equipment for the generation, transmission and distribution of electricity.

• Ensuring the participation and involvement of indigenous engineers and applied research groups in the execution of on-going and future projects right from feasibility studies, with the objective of establishing local capacity in the long term.

34

• Developing and implementing a programme for the participation of the private sector in the various sectors of the electricity industry.

• Developing other potential sites for hydropower, gas and coal-fired power plants for electricity generation.


• Intensifying efforts to generate electricity using nuclear, solar, wind and other renewable resources in order to conserve our fossil fuels and expand our energy security.

• Taking effective measures to ensure the security of electrical installations.

• Providing appropriate incentives to entrepreneurs to ensure adequate returns on investment.

35

• Providing appropriate financing facilities to support indigenous investments in the electricity industry.

• Encouraging off-grid generation and supply of power in


• Encouraging off-grid generation and supply of power in remote or isolated areas.

• Establishing a Rural Electrification Fund to facilitate electrification in the rural areas.

• Establishing a reduced tariff regime for very low income and especially handicapped electricity consumers and a mechanism for funding the subsidy.

36

• j) Energy Efficiency and Conservation

• Ensuring strict adherence to the regulations of the petroleum industry, and relevant agencies on energy resource exploitation and the environment.

• Providing institutional arrangements and incentives for the


• Providing institutional arrangements and incentives for the promotion of energy conservation and the use of energy efficient methods.

• Developing building codes so that buildings are designed to take advantage of climatic conditions in order to reduce energy consumption.

• Ensuring the importation of the more energy- efficient equipment and machinery.

37

• Reducing energy consumption by improving and expanding mass transportation and communication systems all over the country.

• Promoting R & D activities in energy conservation and efficiency including the development and manufacture of energy- efficient equipment and machinery.


energy- efficient equipment and machinery.

• Encouraging the production and use of improved and more-efficient cooking stoves.

• Taking appropriate measures to reduce energy storage, transmission and distribution losses.

• Promoting public awareness about the benefits of improved energy efficiency.

38

4. INVESTMENT AND BUSINESS OPPORTUNITIES

• The following investment and business opportunities would ensue from the strategies earlier outlined:

a) Crude oil:-

• Crude oil exploration and production

• New refining capacity

39

• New refining capacity

• Establishment of outfits for engineering design and fabrication for the oil sub-sector

4. INVESTMENT AND BUSINESS OPPORTUNITIES …Cont’d

• Natural gas:-

• Natural gas gathering, processing, transmission and distribution infrastructure within the country.

• Natural gas export infrastructure development.

• Natural gas exploration and production activities.

40

• Natural gas exploration and production activities.

• Establishment of new gas fired power plants.

• Establishment of new petrochemical plants.


Eleme Refinery Port-harcourt Off-shore gas Production

41

• Tar Sands:-

• Exploration and exploitation of tar sands.

• Refining of heavy crude.

• Coal:


42

• Coal:

• Coal exploration and exploitation.

• Production of smokeless coal briquettes.

• Production of coal stoves.

• Establishment of coal mines.

• Establishment of coal power plants especially with clean coal technologies.


Coal power plant in Mauritius, 2x35MW, coal & bagasse

Coal power plant in Morocco,2x330MW, 2x348MW

(1994-2001 ) 43

• Nuclear:-

• Exploration and Mining of uranium ore deposits

• Establishment of nuclear power plants.


44Koeberg Nuclear Power Plant, South Africa(2x920MW)

• Hydropower:-

• Manufacturing of hydro turbines and accessories

• Establishment of new hydro power plants.

• .


!*+,-./0123456/7-3.+13+-.1-8*19:;110<1=.>*618.5,*17-1<7?71

&7@A1B75/831$-7-*1

30 kW Ezioha Mgbowo SHP Station, Enugu State

45

• g) Fuelwood

• Establishing of plantations of fast growing tree species for fuelwood supply

• Production of efficient fuelwood stoves


Improved Fuelwood Stoves46

• h) Solar:-

• Manufacturing of solar modules and balance-of-systems components.

• Production of solar water heaters, solar cookers, solar driers, etc.

• Establishment of power plants for electricity generation from


• Establishment of power plants for electricity generation from solar energy (solar PV + solar thermal).

• Supporting services (sales, installation and maintenance)

47

.


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• Biomass:-

• Production of electricity from biomass (biogas, agric waste, municipal waste of biological origin).

• Biofuel production.

• Biofuel feedstock production.

• Production and marketing of biomass briquettes and stoves.


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Biogas Digester at Tai Solarin Sec. Sch.

Ikene, Ogun State

51

Sludge


Biogas digester Power House

Generating Plant

A 750 kW Plant for Biogas ElectricityGeneration in Germany

52

• Wind:-

• Establishment of wind electricity generation plants (wind farms)

• Setting up of services businesses in wind technology


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5kW aero generator in Sayya Gidan Gada, Sokoto State

150MW Osorio Wind Farm, Brazil

53

• Energy efficiency and conservation

• Manufacturing of CFLs, LEDs and energy efficient electric motors, refrigerators and airconditioners.

• Sale of CFLs, LEDs and efficient electric motors, refrigerators and airconditioners.

33(]+,Q


54

5. CHALLENGES AND WAY FORWARD

• a) Challenges:

• Unstable Polity

• Inconsistency in energy policies implementation

• Inadequate authority for the coordination of the energy sector

55

• b) Way Forward:

• Strive toward stable polity

• Strengthening of Energy Commission of Nigeria as the coordinating organ of Government on energy policies and plans.

• Enactment of an integrated energy law as an instrument of coordination of the energy sector.

6. CONCLUSION

• Nigeria is endowed with many energy resources, which can be utilized to enhance the socio-economic development of the nation.

• The strategies that should be employed to optimally exploit these energy resources for national development are well articulated in the overall National Energy Policy adopted by Government in 2003.

56

Energy Policy adopted by Government in 2003.

• These strategies would create opportunities for investments and businesses in the energy sector and the entire national economy.

• To implement the strategies fully, the polity must be stable and appropriate legal backing given to the NEP and the NEM by enacting an integrated energy law.

THANK YOU

57

the exploitation of natural energy resources in nigeria for accelerated socio-economic development-...

Documents

energy exploitation

energy sector

energy crops

forms of energy

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renewable energy sources

total primary energy