Oil majors’ shift to green energy leaves Nigerian producers lagging

Major oil companies are taking steps to move beyond core oil and gas business into wind, solar power and energy storage says a new report by Wood McKenzie, a global energy intelligence firm, released recently. But Nigerian oil producers are yet to wake up to this reality.

“A potential tipping point for the shift into wind and solar could be an anticipated decline in the majors’ hydrocarbon production. With new resources needed to sustain volumes beyond 2025, wind and solar could step in to the breach if discovered resource commercialisation, mergers and acquisitions, and exploration fail to deliver, or economics weigh against continued development,” said the report.

Wood McKenzie predicts that multi-national energy companies could spend billions on renewable energy projects between now and 2035. Renewable energy, the report said, could actively compete for the $90 billion oil sector capital expenditure within the period.

After Nigeria signed the Kyoto protocol in 2005, Olusegun Obasanjo, then president, directed the NNPC to create the Renewable Energy Division (RED), to spearhead the launch of a bio-fuel program for Nigeria.

“The rationale for the program, which is aimed at growing a thriving home-grown industry includes; providing jobs and economic empowerment to rural communities, reducing Nigeria’s dependence on fossil fuels and protecting the environment while participating in the Clean Development Mechanism (CDM) program,” said the NNPC.

Twelve years later, the RED has biggest achievement is ‘planning’ to set up an agro-based plant in Benue state. The project, billed to be sited on 20,000 hectares of land, donated by the state government, would cost $300 million.

However three decades of oil search in the Lake Chad basin, $340million spent on an initial seismic study and a further N27billion on drilling activities in the recently resumed operations in Bauchi leaves no doubt about where NNPC’s priorities lie.

“The Nigerian Biofuels Policy and Incentives was drafted in 2007 and revised in 2017, but 10 years after, practical steps that will help the sector, have not been taken by the public sector. Private investors (not oil companies) have led investments in the sector,” Femi Oye, CEO of Green Energy Biofuels tells BusinessDay.

Major indigenous operators such Aiteo, Seplat, Mid-Western, First Hydrocarbon among others do not have significant investments in green energy projects. Companies like Total Nigeria and Oando have pockets of solar projects, though still undeserving of a drum roll yet.

Last year, top oil companies including BP, Eni, Repsol, Saudi Aramco, Royal Dutch Shell, Statoil and Total representing 20 percent of world oil production, agreed to create an investment fund to develop technologies that will promote renewable energy as part of the Oil and Gas Climate Initiative (OGCI).

These companies’ hope to create an investment vehicle that will focus on developing technologies to lower emissions and increase car engine and fuel efficiency. They seek to capture carbon dioxide emissions produced from fossil fuel burning plants and re-inject them into underground caverns.

Shareholders of ExxonMobil, the world’s biggest oil company recently voted a resolution compelling the company to report more clearly how climate change affects its operations. 62 percent shareholders back the move which only garnered 32 percent support last year.

In the wake of US president Donald Trump’s decision to leave the Paris Agreement, (an accord to cut global carbon emissions to pre-industrial levels), major oil companies joined in condemning the decision.

Analysts say it is a sign of new world. “The Majors are only just starting to sow the seeds for the radical changes that lie ahead. There are still question marks over scale. But wind and solar will be increasingly important strategic growth themes that cannot afford to be ignored as the majors plan to 2035 and beyond,” says Wood Mckenzie analysts.

ISAAC ANYAOGU