Oil will still be in high demand till 2045 – Minister

The Minister of State for Petroleum Resources, Chief Timipre Sylva, said Nigeria is focused on developing its gas resources, though oil will be in high demand till 2045.

He said the nation will thus not support any concept that promotes a single pathway to energy transition.

Sylva said this at a one-day Seplat Energy Summit in Abuja, with the theme: “Global Trends in Energy Transition – the African Perspective”.

He said “energy transition has become a major concern for African countries and developed countries as the world works towards cleaner energy”.

The minister, however, regretted that the emphasis on only renewable energy as the sole pathway to energy transition was a source of concern for African countries still working to achieve industrialisation.

“This is why in Nigeria, we reject the concept of a single pathway to the energy transition.

“Indeed, we prefer the concept of ‘just’ energy transition which takes into cognisance the specific circumstances of each nation in developing the energy transition pathway that best achieves the environmental, social, political and economic objectives of the transition in that specific nation.

“Multiple pathways to the energy transition should and must exist in order to ensure that no country is left behind in the process of achieving net-zero by 2050.

“In Nigeria, the position above recognises the possibility of a structural decline in the price of oil and consequential fiscal vulnerabilities that may arise, as well as the increased risk exposure therefrom, and is responding to it in several ways.

“First, it is the ‘Focus on Gas. For us,’ this is at the heart of the energy transition and represents the first step in the journey to renewables away from oil.

“Already, we have declared that gas is our transition fuel, and also represents a destination fuel, as we envisage that it will be part of our energy mix by 2050.

“This is given the vast resources that can be commercialised and utilised,” Sylva said.

The minister expressed optimism that the Petroleum Industry Act (PIA) would help in driving the country’s National Gas Expansion Programme to achieve domestic utilisation.

“Our proven gas reserves are sufficient to cover current demand levels and support plans for the construction of nine new gas-fired power plants with a combined name-plate capacity of nearly 6,000 MW by 2037.

“This validates gas as a viable and transformational fuel for industrial development.
“This is why President Muhammadu Buhari who is also the Minister of Petroleum Resources has declared 2021 – 2030 as the ‘Decade of Gas’.

“It provides the fulcrum for focusing effort and resources required at making gas the centrepiece of Nigeria’s economy by 2030.

“The PIA 2021 also preserves existing levels of Government for a transition period through grandfathering provisions, and proposes a fiscal regime that encourages investment in order to monetise existing reserves before the clock runs out.

“Thus, provisions relating to voluntary conversion, production allowances, lower royalties and taxes, cost optimisation focus, etc, have been enshrined therein to address the envisaged fiscal vulnerabilities.”
Sylva said that the process has commenced for full deregulation of the downstream petroleum sector which would end subsidies and free up funds for national development.

He said the deregulation of the downstream petroleum sector was another strategy proposed to enable the just energy transition in Nigeria.
Sylva added: “Indeed, the recent World Oil Outlook released by OPEC forecasts that oil would still be in high demand by at least 2045.

“This is why every effort must be made to urgently develop our oil resources optimally and importantly, to source for alternative sources of investments
“This is in the light of the stance of not funding the development of fossil fuels by certain players in the global financial ecosystem.”