The year 2024 will be remembered as a tapestry of triumphs and challenges for the energy sector.
While the upstream industry saw notable progress, it fell short of its targets.
In contrast, the downstream sector struggled, burdened by inadequate infrastructure, pipeline vandalism and rising petroleum costs, which continued to drain the wallets of everyday Nigerians.
Rising global oil production, particularly from the US and OPEC+ efforts to stabilise prices created a complex backdrop for 2024. Geopolitical tensions have also added a layer of complexity. Despite its crucial economic role, Nigeria’s oil industry grapples with low gains from the Petroleum Industry Act (PIA), prompting some stakeholders to call for its review.
In the upstream sector, Nigeria successfully auctioned several oil blocks during its 2023/2024 bid round, alongside modest growth in oil production, although it fell short of meeting the 2024 targets. The $3.3 billion Gas Sales and Purchase Agreement (GSPA) for the Brass Fertilizer and Petrochemical Project in Bayelsa was signed this year by the SPDC joint venture. Additionally, after years of failed attempts, the Port Harcourt refinery finally came online in the latter part of 2024. In the power sector, however, the country’s electricity grid collapsed a staggering 13 times in 2024, exposing the ineffectiveness of government interventions as Nigeria struggled to maintain even 6,000MW of power.
Unfortunately, while Nigerians were still grappling with the frequent grid collapses, the Nigerian Electricity Regulatory Commission (NERC) introduced a policy to raise energy tariffs, categorizing households into different bands, with Band A customers facing an increase of over 55%. Compounding the issue, the poor metering of customers persisted as a significant challenge, with the Federal Government unable to advance Phase 1 of the National Mass Metering Programme (NMMP), resulting in a growing number of customers being subjected to estimated billing.
FG auctions 25 oil blocks
On December 18, 2024, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) announced successful bidders for 25 oil blocks which included assets for onshore and deepwater oil fields.
The move was part of efforts aimed at growing Nigeria’s oil production.The final results included the 2022/ 2023 Deep offshore Licensing Round and the 2024 Licensing Round.
The results showed six winning bidders and four reserve bidders for the 2022/2023 Deep Offshore Licensing Round while 19 Winning bidders and six reserve bidders were announced for the 2024 licensing round.
For the 2022/ 2023 Deep Offshore Licensing Round, SIFAX and Royalgate won the asset named PPL 300-DO while the asset code-named PPL 302- DO was won by Ocean Gate Engineering Oil and Gas Limited with no firm announced as reserve bidders for the block.
For oil block PPL 303- DO, NUPRC announced MRS Oil and Gas Company Limited as the winning bid while the reserved Bidder is NNPC E&P Ltd.
For PPL 304-DO, SIFAX & Royalgate Consortium was announced as the bid winner bid just as Homeland Integrated Offshore Services Limited came up as the reserved bidder.
PPL 305-DO oil block went to Hakilat Oil and Gas Consortium Limited as the winning bid, while NNPC E &P Ltd was announced as the reserved bidder.
For the sixth block in the 2022/2023 DEEP Offshore Licencing Round code-named PPL 306-DO, BISWAL Oil and Gas Limited was announced as the winning bid while NNPC Exploration & Production Limited was announced as the reserved bidder.
PH refinery comes on stream
On November 26, 2024, the Nigerian National Petroleum Company Limited (NNPC Ltd) announced that the Port Harcourt refinery had commenced production after a long period of rehabilitation.
The NNPC Ltd said the refinery began truck loading of petroleum products on Tuesday 26 November.
Olufemi Soneye, the chief corporate communications officer of the company disclosed this in a post on his X handle. “PortHarcourt Refinery begins production; truck loading starts today, Tuesday,” Mr Soneye said.
The PortHarcourt Refineries comprise two units, with the old plant having a refining capacity of 60,000 barrels per day (bpd) and the new plant 150,000 bpd, both summing up to 210,000 bpd.
The refinery was shut down in March 2019 for the first phase of repair works after the government secured the service of Italy’s Maire Tecnimont to handle the review of the refinery complex, with oil major Eni appointed technical adviser.
In 2021, NNPC Ltd said repairs had started at PHRC after the Federal Executive Council (FEC) approved $1.5 billion for the project.
On 21 December 2023, the Nigerian government announced the mechanical completion and the flare start-off of the refinery.
Dangote refinery kicks off production
On September 15, 2024, about 100 NNPC Ltd trucks took positions to evacuate petrol from the Dangote petroleum refinery, in what industry observers described as a major milestone for the country.
The state-owned oil company revealed on its official X (formerly Twitter) account that over 100 trucks have been mobilised to the facility with hundreds more en route as of Saturday afternoon.
“NNPC Trading Limited will continue to import a shortfall of 15 million litres to meet Nigeria’s daily demand for petrol estimated at 40-50 million litres a day,” a source had said.
For decades, European refiners have benefited from a profitable market in Nigeria, where unreliable electricity supply has forced businesses in Africa’s fourth-largest economy to depend heavily on imported refined products, valued at $17 billion annually.
“As much as N300-400,000 barrels per day (bpd) of refining capacity in Europe is at risk of closure because of rising global gasoline production,” Andon Pavlov, an analyst at Kpler, a global trade intelligence platform, had said in a note.
Oil production records setback
In 2024, Nigeria’s oil production budget benchmark was set at 1.78 million barrels per day (bpd). Nigeria has been consistently falling short of this target, but in August 2024, it produced 1.57 million bpd, which was closer to the target.
Challenges such as underinvestment, oil theft among others have exacerbated the country’s oil production target which has led to consistent revenue shortfall.
Oil market report showed that Nigeria’s output consistently rose from 1. 276 million bpd in June 2024 to 1.307 million bpd and 1.4 million bpd in July.
Frequent grid collapses mar economic activities
From January 2024 till date, the national electricity grid has collapsed 12 times, with the latest occurring on December 11.
Within one week in October, the grid collapsed three times with its attendant blackouts, sparking outrage among Nigerians.
Minister of Power, Mr.Adebayo Adelabu, recently blamed the frequent grid collapses on weak, obsolete and dilapidated infrastructure of the over 50-year-old national grid.
On October 21, the Transmission Company of Nigeria(TCN) reported a power outage across the northeast, northwest, and parts of north-central Nigeria after the 330-kilovolt(Kv) Ugwaji-Apir double circuit transmission lines one and two tripped off.
Adelabu said most of the towers installed long ago are falling due to weather and climate change, stressing that they require continuous maintenance.“This grid requires a lot of money to maintain,”.
Nigeria wins right to host $5bn Africa Energy Bank
Nigeria, on July 4, won its bid to host the headquarters of the Africa Energy Bank (AEB). An initiative promoted by the Africa Petroleum Producers Organisation(APPO)
The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, disclosed this while speaking to journalists after a virtual meeting of the council of ministers of the African Petroleum Producers Organisation (APPO).
The government said Nigeria emerged as the preferred host nation amidst stiff competition from Ghana, Benin, Algeria, South Africa, and Cote d’Ivoire. The selection, it said, highlights Nigeria’s robust energy sector and its strategic vision for the continent’s energy future.
The bank, according to the government, is expected to facilitate access to funding for energy projects, thereby catalysing economic growth and enhancing energy security.
Mr Lokpobiri emphasised that this initiative aligns with the broader objectives of the African Union’s Agenda 2063, aiming for a prosperous and self-sustaining Africa.
“I am delighted to share that Nigeria has been selected to host the headquarters of the African Energy Bank. This prestigious honour is a testament to our country’s leadership and commitment in the energy sector.
Secretary General of APPO, Mr.Omar Farouk Ibrahim, recently disclosed at the 13th Practical Nigerian Content (PNC) Forum in Yenagoa, Bayelsa State that the AEB would commence operations by March 2025.
Already, Ibrahim said the Africa Energy Bank which needs $5 billion investment to commence operations has secured $2.5 investments from member countries.
Continuing, Lokpobiri said “As the Minister for Petroleum Resources (Oil), I am incredibly proud of this achievement. The African Energy Bank will be a cornerstone for financing and advancing energy projects across Africa, promoting innovation, sustainability, and economic growth.
“This is a remarkable victory for Nigeria and the entire African continent. It symbolises our collective efforts to harness and develop our rich energy resources for a brighter, more sustainable future,” Mr Lokpobiri said.
He assured Nigerians and Africans at large that the establishment of the AEB would mark a transformative era in meeting energy needs.
“We are committed to ensuring that this bank will not only move Nigeria forward but will also be a beacon of progress for the entire continent. Our goal is to foster sustainable energy solutions that are both innovative and inclusive,” he added.
He highlighted the collaborative spirit of the APPO members and their shared vision for a united, energy-secured Africa.
“Thank you to everyone who made this possible. Together, we are shaping the future of energy in Africa, starting right here in Nigeria,” he said.
SPDC JV partners signs $3.3bn GSPA for Brass petrochemical project
SPDC JV partners in October finally signed the Gas Sales and Purchase Agreement (GSPA) for the Brass Fertilizer and Petrochemical project in Bayelsa State.
The landmark agreement, supervised by the Minister of State Petroleum Resources (Gas), Rt. Hon. Ekperikpe Ekpo, paves the way for the Brass Fertilizer and Petrochemical Company Limited (BFPCL) and its partners to achieve financial close for the Brass Fertilizer and Methanol Project.
The JV partners, comprising NNPC Ltd, Shell Petroleum Development Company (SPDC), TotalEnergies Ltd, and Eni, will supply 270 million standard cubic feet of gas per day (270MMscfd) to BFPCL, the largest single GSPA to any domestic gas offtaker in Nigeria.
The Brass Fertiliser and Petrochemical Project, valued at $3.3 billion, is set to generate more than $1.5 billion annually from exports of fertilisers, petrochemicals, and other gas-based products.
Ekpo in a speech at the event praised President Bola Tinubu’s steadfast support and guidance, saying, “Achieving this GSPA showcases Nigeria’s business-friendly environment and the government’s commitment to investor-friendly policies.”
The Gas Minister urged all parties to maintain their steadfastness, expecting BFPCL and its partners to achieve financial closure and commence construction soon to “bring in much needed Foreign Direct Investment (FDI) and create thousands of jobs for our teeming population, while changing the face and fortunes of the host Bayelsa State and community for good.”
Permanent Secretary, Ministry of Petroleum Resources, Ambassador Nicholas Ella Agbo described the GSPA as a significant milestone in monetizing Nigeria’s vast gas reserves, currently over 209 trillion cubic feet.
“The project will reduce fertilizer imports by 30 per cent, saving Nigeria approximately $200 million in foreign exchange annually, and contribute around $600 million annually to Nigeria’s GDP and create over 5,000 direct jobs and 35,000 indirect jobs significantly improving the livelihoods of many Nigerians, particularly in the Niger Delta region,” he said.
Source: Sun
