Decline in crude oil output means less electricity — NERC warns
By Akinyemi Precious
The Nigerian Electricity Regulatory Commission (NERC) has warned that a decline in crude oil production in Nigeria will result in reduced availability of natural gas for power plants, leading to an impact on electricity production.
This was stated by NERC in its latest quarterly report where it addressed power generation risks in the country.
According to the report, 75 per cent of the available power generation capacity in Nigeria is gas-based.
The report highlighted that 75 per cent of Nigeria’s available power generation capacity relies on gas-based sources, making it vulnerable to fluctuations in gas availability.
The report also emphasized that most power plants in the Nigerian Electricity Supply Industry (NESI) depend on associated gas, which is produced alongside crude oil exploration.
“In addition to the seasonal variability affecting the hydro plants, the NESI also has significant challenges with gas availability with 75 per cent of available generation capacity being gas-based. Most of the power plants in the NESI are dependent on “Associated Gas” that is, gas produced during crude oil exploration.
“This puts the plants at an added level of exposure because significant drops in crude oil production will also mean reduced gas availability to run the plants,” the report said
Data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) which showed that in January 2023 – 1,258,150 barrels per day (bpd), February 2023 – 1,306,304 bpd, March 2023 – 1,268,202 bpd, April 2023 – 998,602 bpd, May 2023 – 1,183,691 bpd were produced and that Nigeria’s crude oil production has improved a little from the rate recorded in 2022 during the height of crude oil theft.
This means that the country still needs to produce more oil to meet the revised OPEC quota of 1.3 million barrels per day.
Also,the NERC report also pointed out gas transmission infrastructure as another potential vulnerability affecting thermal plants and that most of the plants are not co-located with gas production facilities, they obtain their gas from the national gas transmission infrastructure.
However, in the past, the national gas transmission infrastructure has faced challenges of insecurity as well as supply quality, specifically, gas purity and gas pressure.
According to NERC, these challenges point to a need for further diversification of Nigeria’s electricity supply mix and that it is reviewing its regulations and designing green power initiatives to mitigate these risks, including working with the Transmission Company of Nigeria (TCN) to evaluate Nigeria’s national grid’s ability to integrate grid-scale renewable energy sources such as wind and solar.
