1. POLITECNICO DI TORINO
Department of Environment, Land and Infrastructure Engineering
Master of Science in Petroleum Engineering
SCENARIOS FOR NIGERIA’S ENERGY SUPPLY TO EUROPE:
A MODELLING ANALYSIS
Supervisor:
Prof. Carpignano Andrea
Dr. Daniele Grosso
Anthony Akpos UWHERAKA
March 2015
Thesis submitted in compliance with the requirements for the Master of Science degree
2. ii
DECLARATION
I hereby declare that I carried out the work presented in this thesis in the last three (3)
months under the supervision of Prof.Lavagno Evasio and Dr. Daniele Grosso of Politecnico di
Torino, Italy. All information taken from other sources and being reproduced in this thesis are
clearly referenced.
……/……/2015 ………..………….……………………
Date Anthony Akpos UWHERAKA (student)
……/……/2015 …….………………………………
Date Prof. Carpignano Andrea (supervisor)
……/……/2015 …….………………………………
Date Dr Daniele GROSSO (supervisor)
3. iii
ACKNOWLEDGEMENT
I wish to thank God almighty, who brought me thus far and who has been my help and
salvation. I wish to acknowledge my wife and soul mate RACHAEL AJORITSEDEBI
UWHERAKA (for in you I find love, strength, joy, happiness and a babe par excellence, despite
all the challenges life throws at us), my lovely sons KESIENA BRISTAN, AKPOS TRISTAN
and RUEMU JOSHUA (you boys make fatherhood extremely interesting), my parents MR and
MRS A.S UWHERAKA, my In-laws MR and MRS MONE and my entire family for their
support and prayers throughout my sojourn here in Italy, amongst other things.
I want to thank the management team of Integrated Data Services Ltd (a subsidiary of the
Nigerian National Petroleum Corporation), particularly my manager MR.T.J SALUBI, my
mentors emeritus MR ADEYINKA ADEYEMO, PAUL DUKE, SUNNY ESHO, amongst
others; for this opportunity and your continual belief in me in meeting up with set objectives and
standards despite tight schedules. I also want to thank the Nigerian Agip Oil Company for the
scholarship awarded to me, chiefly MR BOUFINI THEOPHILUS (very few can surpass your
standards).
In a special way, I want to thank my supervisors, Prof Carpignano Andrea and Dr Daniele
Grosso for all support and the selfless effort in seeing me through to this level. I also want to
thank all the Professors of the Petroleum Engineering programme for their top-notch tutelage.
Lastly, I want to thank my friends and course-mates who have made my stay in Torino blissful
beyond imagination.
4. iv
TABLE OF CONTENTS
Declaration ii
Acknowledgement iii
Table of contents iv
Introduction xi
Chapter 1
1 Crude oil and natural gas resources in Nigeria .....................................................................1
1.1 The African resources..........................................................................................................1
1.2 Background on Nigeria’s Socio-Economic Structure ...........................................................1
1.3 Background on Nigerian fields ............................................................................................3
1.4 Historical background of hydrocarbon exploration in Nigeria ..............................................6
Chapter 2
2 Nigeria’s crude oil and natural gas production and export...................................................8
2.1 Nigeria’s Crude Oil Reserves .............................................................................................8
2.2 Nigeria’s Crude Oil Typology and Characteristics ..............................................................9
2.3 Nigeria’sCrude oil Production, Consumption and Export..................................................10
2.4 Nigeria’s natural gas reserves ...........................................................................................11
2.5 Chemical composition of Nigeria’s natural gas.................................................................11
2.6 Nigeria’s Natural gas production and consumption...........................................................12
2.7 Nigeria’s Gas Exports and Export Oriented Projects........................................................12
5. v
2.7.1 Nigerian Liquefied Natural Gas Plant ...............................................................................13
2.7.2 Brass Liquefied Natural Gas Plant ....................................................................................14
2.7.3 Trans-Saharan Gas Pipeline..............................................................................................14
2.7.4 West African Gas Pipeline...............................................................................................14
Chapter 3
3 Methodology...................................................................................................................16
3.1 The REACCESS project...................................................................................................16
3.2 Identification and characterisation of supply corridors .....................................................17
3.2.1 Open sea corridors............................................................................................................18
3.2.2 Captive corridors..............................................................................................................19
3.2.3 DBT Worksheet ...............................................................................................................19
3.3 Corridor modelling: the REACCESS CORridor (RECOR) structural base........................20
3.4 The Pan European TIMES model .....................................................................................28
3.5 The TIAM TIME model...................................................................................................29
3.6 Evaluation and implementation of Risk parameters...........................................................30
3.6.1 Socio-economic risk: Factors Analysis .............................................................................31
3.6.2 Technology risk factors ....................................................................................................33
3.7 Risk Implementation .......................................................................................................34
Chapter 4
4 Scenarios, results and analysis .........................................................................................37
4.1 Scenario hypotheses .........................................................................................................37
4.2 Natural gas results and analysis ........................................................................................38
4.3 Liquefied Natural Gas results and analysis........................................................................40
4.3.1 The European Axis...........................................................................................................40
4.3.2 The Rest of the World Axis ..............................................................................................42
4.4 Crude oil result and analysis .............................................................................................44
6. vi
4.5 Comparative outlook of Nigeria’s total exports ................................................................48
4.6 Risk analysis ...................................................................................................................49
4.6.1 Specific risk for Europe ...................................................................................................50
4.7 CO2 emissions .................................................................................................................52
4.8 Effects of bounds on the Marginal cost of energy to the EU from Nigeria .......................53
Chapter 5:
5 Conclusions....................................................................................................................55
References 57
Appendix 1 58
Appendix 2 59
Appendix 3 61
Appendix 4 63
Appendix 5 65
Appendix 6 67
Appendix 7 70
Appendix 8 73
Appendix 9 74
7. List of figures
Figure 1: Population and GDP profile of Nigeria (source: OPEC Annual Statistical Bulletin,
2014 and 2009) ...........................................................................................................................2
Figure 2: Map of Nigeria showing oil and gas acreages or block .................................................6
Figure 3: First oil well in Nigeria (Oloibiri).................................................................................7
Figure 4: Nigeria’s Crude oil Reserve Volume ............................................................................8
(Source: Fiscal Vulnerability and Sustainability in oil producing sub-Sahara Africa page 32,
2007) ..........................................................................................................................................8
Figure 5: Major importers Nigerian LNG in 2013
(Source: U.S Energy Information Administration report on Nigeria- 30th
December, 2013).......13
Figure 6: General structure of a DBT Excel file.........................................................................17
Figure 7: Coding of segments for open sea corridors. ................................................................18
Figure 8: Coding of segments for captive corridors. ..................................................................19
Figure 9: Schematic representation of the Reference Energy System for the PET model............29
(Source: KanORS-ERM website: http://www.kanors-
emr.org/Website/Models/PET/Mod_PET.asp)...........................................................................29
Figure 10: Schematic representation of the Reference Energy System for the TIAM model.......30
(Source: KanORS-ERM website: http://www.kanors.com/DCM/TIAM_World/Docs) ..............30
Figure 11: Common factors shared by different variables (Source: REACCSS - Summary report
on ‘Risk of Energy Availability Common Corridors for Europe Supply Security’) ....................31
Figure 12: Selection of variables, time aggregation and factor analysis (Summary report on ‘Risk
of Energy Availability Common Corridors for Europe Supply Security’). .................................32
Figure 13: Factor scores, Indexes and Overall Risk ...................................................................32
Computation (Summary report on ‘Risk of Energy Availability Common Corridors for Europe
Supply Security’) ......................................................................................................................32
Figure 14: Map of the overall socio-economic energy risk index ...............................................33
(Summary report on ‘Risk of Energy Availability Common Corridors for Europe Supply
Security’) ..................................................................................................................................33
Figure 15: Growth projection of natural gas supply via TSGP ...................................................39
Figure 16: Graphical plot of Nigeria’s LNG supply to Europe over the next 30 years. ...............41
8. viii
Figure 17: Graphical plot of Nigeria’s LNG supply to the rest of the world (ROW) over the next
30 years.....................................................................................................................................43
Figure 18: Nigeria’s crude oil supply to Europe.........................................................................46
Figure 19: Nigeria’s crude oil supply to the rest of the world (ROW) ........................................47
Figure 20: Nigeria’s total energy export ....................................................................................48
Figure 21: Total EU risk against EU risk associated to the Nigerian energy supply corridor ......49
Figure 22: EU28 specific risk related to supply from Nigeria ....................................................51
Figure 23; CO2 emissions from crude oil energy transport from Nigeria to the European Union in
Kton/y.......................................................................................................................................52
Figure 24: Average marginal cost of EU28 supply from Nigeria ...............................................54
9. ix
List of Tables
Table 1: Proven crude oil reserves in Africa (Source: OPEC Annual Statistical Bulletin, 2014
page 22) ......................................................................................................................................3
Table 2: Proven natural gas reserves in Africa (Source: OPEC Annual Statistical Bulletin, 2014
page 23) ......................................................................................................................................3
Table 3: Crude oil daily production in Africa (Source: OPEC Annual Statistical Bulletin, 2014
page 29) ......................................................................................................................................4
Table 4: Natural gas marketed production in Africa (Source: OPEC Annual Statistical Bulletin,
2014 page 33) .............................................................................................................................5
Table 5: Nigeria Socio-Economic index showing GDP and Population (source: OPEC Annual
Statistical Bulletin, 2014 and 2009).............................................................................................2
Table 6: Specific weight and sulphur content of Nigerian Crude oil (source:
http://www.oocities.org/twokdiamond/nigerian_crude_oil_specifications.htm) ...........................9
Table 7: Total crude oil consumption, production and export
(http://nigeria.opendataforafrica.org/zrowzgc/nigeria-total-petroleum-consumption-1980-2011)
.................................................................................................................................................10
Table 8: Nigeria’s crude oil destinations....................................................................................11
Table 9: Nigeria’s Gas Production from 2009 to 2013 (source: OPEC Annual Statistical Bulletin,
2014 page 31) ...........................................................................................................................12
Table 10: Major natural gas export route (source: US EIA report on Nigeria)............................15
Table 11: Nigeria’s crude oil supply corridors to Europe...........................................................23
Table 12: Nigeria’s natural gas and LNG supply routes to Europe.............................................27
Table 13: Hypothesis Matrix for Nigeria Energy Supply ...........................................................37
Table 14: Result Nigeria’s natural gas supply simulation to the EU for the next 30 years ..........38
Table 15: Nigerian LNG energy supply to the European Union over the next 30year period......40
Table 16: Nigerian LNG energy supply to the Rest of the World in the next 30year period........42
Table 17: Nigerian crude oil supply to the Europe.....................................................................44
Table 18: Nigerian crude oil supply to the Rest of the World.....................................................45
Table 19: Nigerian contribution to the European Risk ...............................................................50
Table 20: Total energy supply from Nigeria to Europe ..............................................................50
Table 21: EU28 risk related to supply from Nigeria...................................................................50
10. x
Table 22: EU28 specific risk related to supply from Nigeria......................................................51
11. xi
Introduction
One of the main resources of Africa is the wide availability of natural resources, like natural gas
and crude oil. A lot of large fields are nowadays productive in several countries, like Libya,
Algeria, Angola and Nigeria, while others have been recently discovered in different areas as
Ghana, Mozambique, Tanzania and Uganda.
In this framework, in particular, Nigeria plays a relevant role, as one of the most important
African countries in terms of availability of fossil fuels resources, production and export towards
various energy consumption areas in the world.
The aim of this study is to analyze the export by energy corridor of fossil fuel commodities from
Nigeria to Europe under different scenarios. To this purpose, the forecasting optimization
TIMES model developed under the FP7 REACCESS project has been adopted. A preliminary
analysis of the existing and planned/possible future corridors (both captive and open sea) has
been firstly performed, in order to update the model database. After this, three different scenarios
have been implemented: a baseline and two policy scenarios (one simulating a risk of energy
supply reduction for the European Union and the other CO2 emissions reduction.
The effects have been analyzed and discussed, showing the merits and demerits of each policy
scenarios, likewise their attendant effects on the energy supply corridors with respect to total
costs, marginal costs for Europe, environmental impacts (as regards CO2 emissions) and amount
of energy supply that can be delivered under each scenario.
Finally it was concluded that the operational scenario that can be implement based on the
objectives of this study is the Baseline model scenario based on analysis of the results gotten
from the models simulations.
12. 1
1 Crude oil and natural gas resources in Nigeria
1.1 The African resources
The economic profile of Africa is on the rise, hosting some the world’s fastest growing emerging
economies. This sudden boom in economic upheaval is based on the recent discovery oil and gas
fields in hereto virgin regions of the continent particularly in Ghana, Uganda, Tanzania and
Mozambique (1)
.This doesn’t mean that the arrival of new oil and gas finds are not froth with its
own challenges especially its impact on other economic sectors of the host nation.
Africa has had a long history with hydrocarbon based resources and has a long list of oil
producing countries embodied in it.
The continent presently accounts for over 13.6% of the world’s production output and averagely
23.6% of the World’s total export with respect to oil and gas. Of which Nigeria stands as the
continent’s leader in the oil and gas industry.
1.2 Background on Nigeria’s Socio-Economic Structure
Nigeria is the most populous nation in the African Continent with a population of 140 million
people according to the National Population Census conducted in 2006; of which 60% by today’s
prediction reside in the urban areas. The United Nations Population Funds in association with the
Nigeria Population Board projects that the nation’s population will hit the 203 million by 2025
and 279 million by 2050(5)
(Table 1 and Figure 1 shows the population growth rate coupled with
GDP from 2005 to 2013).
13. 2
Year 2005 2006 2007 2008 2009 2010 2011 2012 2013
Population in 106
people 140879 144273 147983 151320 154729 158057 162799 167683 172294
GDP at market prices $106
110273 144301 181581 204917 166538 366347 415908 457601 515787
Nigeria's Socio-Economic index
Table 1: Nigeria Socio-Economic index showing GDP and Population (source: OPEC Annual Statistical Bulletin, 2014
and 2009).
Figure 1: Population and GDP profile of Nigeria (source: OPEC Annual Statistical Bulletin, 2014 and 2009)
The graphical deep of the GDP profile between 2008 and 2009 (from figure 3) coincides with the
global economic meltdown across the world.
Principally the Nigeria economy relies heavy on the oil and gas sector for it budgetary
allocations; thus accounting for over 90% of the country’s GDP. Consequently the government is
working on programmes to divest the economy from its over reliance on the oil and gas sector to
avoid a bubble and burst scenario as witnessed in the 1970s resulting in the formation of OPEC
with the hope of controlling world oil prices, as well as protecting the economies of oil
producing nations.
14. 3
1.3 Background on Nigerian fields
Nigeria is ranked as the largest oil and gas producer in the African subcontinent with proven
reserves of 37.1 million barrels of oil in 2013 (as can be seen in Table 2, showing the historical
trend of the oil proven reserves in the main African Producing Countries during the last five
years) and 187 trillion cubic feet of natural gas respectively (as seen in Table 3, Africa’s proven
gas reserves over the last five years).
Of peculiar interest is that of natural gas both dry and wet gas; due to the fact that they were
tagged accidental finds during the exploration for oil in the early 1960s and as such were flared
off as waste.
Africa's Proven Oil Reserves (106
barrels)
Country 2009 2010 2011 2012 2013
Libya 46422 47097 48014 48472 48363
Nigeria 37200 37200 37200 37139 37070
Algeria 12200 12200 12200 12200 12200
Angola 9500 9055 9055 9055 9011
Sudans 5000 5000 5000 5000 5000
Egypt 4300 4400 4400 4400 4400
Gabon 2000 2000 2000 2000 2000
Others 7025 8671 8605 10105 10105
Total 123647 125623 126474 128371 128149
Table 2: Proven crude oil reserves in Africa (Source: OPEC Annual Statistical Bulletin, 2014 page 22)
Africa's Gas Reserves (109
scf)
Country 2009 2010 2011 2012 2013
Algeria 4504 4504 4504 4504 4504
Angola 275 275 275 275 275
Cameroon 235 157 155 153 151
Congo 130 130 127 124 121
Egypt 2170 2186 2210 2190 2185
Libya 1549 1495 1547 1549 1506
Nigeria 5192 5110 5154 5118 5111
Others 593 607 626 656 645
Total 14648 14464 14598 14569 14498
Table 3: Proven natural gas reserves in Africa (Source: OPEC Annual Statistical Bulletin, 2014 page 23)
15. 4
With the increasing profile of natural gas as a cheaper and cleaner source of primary energy,
more oil companies focusing more on gas exploration as estimated predictions put the global
crude oil reserve are go decline within the next 50 to 70 years; as most producing fields are
beyond their peak periods and new finds are becoming increasingly difficult to find coupled with
high cost of extraction. In particular, Table 4 and 5 shows the evolution of the daily crude oil
production and marketed gas production in Africa from 2009 to 2013: focusing on Nigeria, and
firstly referring to crude oil, after an increase in 2010 a reduction trend can be noticed, even if it
still remains the main productive Country, accounting for about 23% of the total production of
Africa; referring instead to marketed gas, a peak production in 2011 and 2012 followed by a
reduction in 2013 is observable.
Africa's Crude Oil Production (103
barrels/day)
Country 2009 2010 2011 2012 2013
Libya 1473.9 1486.6 489.5 1450.0 993.0
Nigeria 1842.0 2048.3 1974.8 1954.1 1753.7
Algeria 1216.0 1189.8 1161.6 1199.8 1202.6
Angola 1738.9 1757.6 1618.0 1704.0 1701.2
Sudans 475.2 462.2 428.0 119.3 232.3
Egypt 523.1 523.1 530.4 533.1 529.8
Gabon 237.6 252.4 251.0 242.0 234.1
Congo 274.9 295.6 295.3 277.1 266.7
Equatorial Guinea 281.7 256.1 239.9 262.1 257.1
Others 401.7 393.7 449.8 454.0 469.3
Total 8465.0 8665.4 7438.3 8195.5 7639.8
Table 4: Crude oil daily production in Africa (Source: OPEC Annual Statistical Bulletin, 2014 page 29)
16. 5
Africa's Marketed Gas Production (106
scf)
Country 2009 2010 2011 2012 2013
Algeria 81426 81615 82767 86454 79647
Angola 690 733 752 760 925
Tunisia 1810 2030 1930 1860 1879
South Africa 3600 3744 3531 3200 3200
Egypt 62690 61330 61260 60600 57600
Libya 15900 16819 7855 18118 18463
Nigeria 23206 28099 41323 42571 38411
Equatorial Guinea 5900 6136 6235 6500 6290
Côte d’Ivoire 1300 1652 1317 1317 1329
Mozambico 3600 3744 3548 3600 3631
Total 200122 205602 210518 224980 211375
Table 5: Natural gas marketed production in Africa (Source: OPEC Annual Statistical Bulletin, 2014 page 33)
Moreover this affords country which were initially import dependent for primary energy to
become self-sufficient as is the case of United States of America, Canada and United Kingdom
(as regards to hydraulic fracturing for tight and shale gas).
Nigeria’s oil and gas reserve profile is set to rise at the rate of 6.5% to 12% per annum with the
new incentivized drive by the government to open up frontal inshore basins (marginal field),
deep and ultra-deep offshore acreages off the country’s coast with ongoing reforms aim at
streamlining tax and royalties regimes, as well as enhancing transparency within the sector. All
of which is package into the Petroleum Industry Bill (PIB) presently undergoing parliamentary
review in the nation’s senate.
Although onshore reserves are in decline due to aging and investment slowdown, this has no
effect on the country’s overall national reserve outlook as other major field come online to break
the gaps. Such as the Bonga North, Bonga Northwest and Enra fields (2)
.
As shown in Figure 2, most of the Nation’s oil and gas acreages lie within the Gulf of Guinea
passing through the Niger Delta inwards towards the Anambra Basin, Benue trough and Chad
basin, showing a transition from offshore basins shallow marine basins onshore basins
frontal onshore basins, where the hydrocarbon prolific zones terminates.
17. 6
Presently, seismic activities are ongoing within the Chad basin situated in Borno state, North-
Eastern Nigeria with preliminary shows and subsurface structures indicative of hydrocarbon
bearing zones.
Figure 2: Map of Nigeria showing oil and gas acreages or block
1.4 Historical background of hydrocarbon exploration in Nigeria
Exploration activities for hydrocarbon based resources began in 1908 with the discovery of large
deposits of bitumen in Araromi area of Western Nigeria (in present day Ondo State), by the
Nigerian Bitumen Corporation (NBC); which was wholly a German company. This
concessionary right to explore was terminated by British Government who was the colonial
rulers of the country with the advent of the Great War (World War I) (3)
.
Exploration resumed in 1937 with the new licensee to explore being Shell D’Arcy, the
forerunners of present day Shell-BP worldwide. And as usual the outbreak of conflict (World
War II) brought a cessation of exploration activities in 1939.
Exploration resumed a third time in 1947 at the end of World War II, with Shell D’Arcy being
the only licensee to explore for these resources for the Greater Nigeria (which includes the whole
of Nigeria, parts of the Chad and Niger Republic respectively); with a capital investment of =N=
18. 7
30 million equivalent to $45 million. Fresh with this new investment and rigorous exploration
activities, commercial oil was discovered in Oloibiri in 1956 in the Niger Delta Region of the old
Midwestern state of Nigeria (Figure 3); with a production capacity of 5100 barrels per day in
1958 when the field came online (4)
.
Figure 3: First oil well in Nigeria (Oloibiri)
19. 8
2 Nigeria’s crude oil and natural gas production and
export
2.1 Nigeria’s Crude Oil Reserves
Nigeria’s proven crude oil reserves stands at 37.1 billion barrels, with an average productivity of
about 2.5 million barrels per day, including condensates for the fiscal year 2013(8)
. These are
reserves which are technically and economically recoverable with available technology with a
95% chance of recoverability (8a)
.
The country’s probable reserve is put at 18.7 billion barrels with a 50% chance of recoverability
with today’s technology and economic climate couple with rigorous geological and engineering
input (9)
. While the possible reserves stand at 8.22 billion barrels with 5% chances of
recoverability with the same conditions of probable reserves extraction (10)
.
Figure 4: Nigeria’s Crude oil Reserve Volume
(Source: Fiscal Vulnerability and Sustainability in oil producing sub-Sahara Africa page 32, 2007)
20. 9
Average oil depletion rate is 15% but the reserves base has continued to increase due to
increased additions from exploration and appraisal drilling and deep offshore exploration. This
shows an onward growth of 100.3% from 16.7 billion barrels in 1980.
2.2 Nigeria’s Crude Oil Typology and Characteristics
Nigeria crude oil is characterized by low sulphur content (0.15% by weight) and high API
gravity (35.3 APIº), designating it as sweet light crude (Table 6 defines the crude typology and
characteristics).
Nigerian Crude Types and their defining Characteristics
Crude Type Grade Sulphur Content (% by weight) Specific Gravity (API)
Bonny Light oil Light 0.15 35.3
Qua Iboe Crude oil light 0.13 36
Brass River Crude oil medium 0.22 34.6
Forcados Crude oil Medium- light 0.14 34 - 38
Table 6: Specific weight and sulphur content of Nigerian Crude oil (source:
http://www.oocities.org/twokdiamond/nigerian_crude_oil_specifications.htm)
This is based on the fact that crude oil that fall within this category are easily processed into
gasoline, kerosene and high grade diesel oil, with little or no fowling of distillation equipment
and lower operational costs for refining (6)
. These characteristic properties are the major factors
driving its high demand and price by American and European refiners (bench mark price as at 5th
August, 2014 is put at $109.3 per barrel) as overall cost of processing is considerably lower than
other crude variants available in the market (7)
.
21. 10
2.3 Nigeria’s Crude oil Production, Consumption and Export
Nigeria’s daily crude production peaked at 2.44 million barrels per day in 2005, but started to
decline downwards due to supply disruptions caused by violent militant groups vying for a piece
of the oil dividends for themselves. This resulted in production dropping to 1.8 million barrels
per day in 2009. Although with the amnesty programme in place, there has been an upsurge in
production levels, but it’s yet to reach the production figures of 2005 (this seen in Table 7
showing production, consumption and export over a thirteen year period).
Year Total Consumption
(1000 bpd)
Total Crude Oil Production
(1000 bpd)
Net Export
(1000 bpd)
2000 245.6 2165 1919.4
2001 305.7 2256 1950.3
2002 303.9 2117 1813.1
2003 288.5 2275 1986.5
2004 277.1 2329 2051.9
2005 311.6 2627 2315.4
2006 284.5 2440 2155.4
2007 268.9 2350 2081.1
2008 269.1 2165 1895.9
2009 242.5 2208 1965.5
2010 242.2 2455 2212.8
2011 286.0 2550 2264.0
2012 343.0 2520 2177.0
2013 384.9 2450 2065.1
Table 7: Total crude oil consumption, production and export (http://nigeria.opendataforafrica.org/zrowzgc/nigeria-total-
petroleum-consumption-1980-2011)
In addition to the afore mentioned statement, the upward trend of post 2009 production levels
can be attributed to the coming online of new deepwater offshore production tagged recent
discoveries.[2a]
However, the intra-national consumption rate is between 250-385 thousand barrels per day for
the year 2005 -2013.
The country currently exports approximately 2.193 million barrel of crude per day, with Europe
becoming an important trading partner likewise Asia and Pacific sectors of the world with
22. 11
respect to import volumes. Over time the import volumes from North America has been decline
due to increased continental self sufficiency as regards discovery of shale oil, amongst other
reasons.
Total Crude Oil Destination from Nigeria (1000 bbl/d)
2009 2010 2011 2012 2013
Europe 652 744 744 744 965
North America 1423 1623 1233 1224 395
Asia and Pacific 85 91 91 91 373
Latina America na na 206 206 263
Africa na na 103 103 197
Total Oil Export 2160 2458 2377 2368 2193
Table 8: Nigeria’s crude oil destinations
2.4 Nigeria’s Natural Gas Reserves
Nigeria is 4th
largest gas producer in the world with a proven reserve base of 187 trillion cubic
feet of natural gas with probable reserve estimate of 19.50 trillion cubic feet of and 9.84 possible
reserve based on 50 and 5 percentile of the proven reserve base. Based on these assumptions
Nigeria is said to be gas rich state rather than oil rich state [8b]
.
As aforementioned, natural gas was an accidental find during the hunt for crude oil and were
consequently flared off when found in association with oil.
2.5 Chemical Composition of Nigeria’s Natural Gas
Compositionally, natural gas is made up of chiefly 90% methane, 1.5-2.0% carbon dioxide, 3.9-
5.3% ethane, 1.2-3.4% propane, 1.4-2.4% heavy fractions and trace amounts of sulphur. The
amounts of sulphur content may vary depending on the biological source of the organic matter
that formed the hydrocarbon.
Based on the compositional structure of Natural gas found in Nigeria, it can be called sweet gas
because of it its low sulphur content.
23. 12
2.6 Nigeria’s Natural gas production and consumption
In 2013, Nigeria’s gross production of natural gas stood at 2.8 trillion scf. Total in-country gas
consumption for power generation, shrinkage and domestic use stood at 10%, reinjection 20%
and flaring accounted for approximately 30% of the total production. This is shown in the
country’s gas production profile in Table 9 over a period of five years.
Nigeria's Gas Production (106
scf)
2009 2010 2011 2012 2013
Gross Production 56716 71758 84004 84846 79626
Marketed Production 23206 28099 41323 42571 38411
Flaring 13328 15294 14270 13182 12112
Reinjection 14245 21286 22519 20520 21466
Shrinkage 5937 7079 5892 8573 7637
Table 9: Nigeria’s Gas Production from 2009 to 2013 (source: OPEC Annual Statistical Bulletin, 2014 page 31)
The high amount of flaring and reinjection is due to the fact that most of the nation’s oil field
lacks the necessary infrastructure to capture associated gases during oil production and refusal of
most major and marginal field producers to invest in Gas capturing infrastructural due to its
capital intensive nature (2b)
.
2.7 Nigeria’s Gas Exports and Export Oriented Projects
Nigeria exported 1.4 trillion scf of natural gas as Liquefied Natural Gas (LNG) via Bonny LNG
facility terminal as this is the only operational terminal as other terminal are still in their
construction and feasibility studies phase, while a significantly small portion is exported via the
West African Gas Pipeline to neighbouring countries. The nation’s exports accounts for 8% of
the globally traded LNG (2c)
.
24. 13
Its principal trading partners are Japan accounting for 24% of the total volume of liquefied
natural gas exported in 2013 (11)
, Spain (17%), France (12%), South Korea (9%), India (7%), and
the rest of the world (31%), as it can be seen in Figure 5. The high volume of trade from Japan is
as a result of the Fukushima nuclear plan meltdown in 2011. This event swayed the local
populace option about the safety of using nuclear power for electricity generation; thus requiring
alternative source for power generation.
Figure 5: Major importers Nigerian LNG in 2013
(Source: U.S Energy Information Administration report on Nigeria- 30th
December, 2013).
2.7.1 Nigerian Liquefied Natural Gas Plant
The only plant presently built is located on Bonny Island, Rivers State, and it is the country’s
only fully operational export terminal. It was setup in 1992 and reached its full phase operational
capacity in 1999 with the first shipment of products from the initial two liquefaction trains. Since
then, it has been expanded to six trains with a production capacity of 1056 Bcf/year of LNG and
80,000 bbl/year of liquefied petroleum gas. At present a seventh train is under construction,
which will increase the LNG capacity to 1440 Bcf/year. Its shareholder or partners are Nigeria
25. 14
National Petroleum Corporation hold a 49% stake in the company, Shell Gas B.V with a 25.6%
stake, Total LNG Nigeria with 15% and Eni International with10.4%.
2.7.2 Brass Liquefied Natural Gas Plant
The Brass LNG Project is situated on Brass Island in Bayelsa State, and is presently in its
engineering phase. The facility is billed to export over 10 million metric tons of LNG per year,
with the Nigeria National Petroleum Corporation holding a 49% equity stake in the company,
ConocoPhillips holding 17%, Eni with 17% and Total with 17%. But the planned take-off of the
plant has been put hold due to delays in the signing of the Final Investment Decision (FID) as a
result of the decision of ConocoPhillips lo liquidate all its Nigerian assets.
The plant is billed to possess two initial liquefaction trains and a loading terminal (12)
2.7.3 Trans-Saharan Gas Pipeline (TSGP)
This novelty idea was coined by the Nigerian and Algerian government to build a 2500 mile long
pipeline from the Nigerian Niger-Delta region where 98% of the country’s oil fields are located
to Algeria’s Beni Saf export terminal on the Mediterranean Sea; from which natural gas can be
piped or shipped to Europe. Despite Nigeria’s NNPC and Algeria’s Sonatrach signing an
agreement in 1999 to effect implementation, the project has been froth with challenges
particularly the security challenges along the Nigerien route through which the pipeline is to run.
Alternative routes have been suggested but a combination of terrain, security issues and budget
overrun still plague these options.
2.7.4 West African Gas Pipeline (WAGP)
This is a 420- mile long pipeline that runs from Escarvos in Niger-Delta region of Nigeria to
Ghana passing through Togo and Benin republic; with a view of supply these west African coast
nations with gas for electricity generation. The pipeline is proposed to have a yield capacity of
26. 15
170 MMcf/day of gas. The pipeline is operated by the West African Gas Pipeline Company
(WAPCo) with Chevron West African Gas Pipeline Limited (holding 36.7%), NNPC (25%),
Shell Overseas Holding (18%), Takoradi Power Company Limited (16.3%), Societe Togolaise
de Gaz (2%) and Societe Togolaise BenGaz S.A (2%) .
Table 10 summarises the main characteristics of Nigerian export infrastructures.
Export
points
Location Shareholders Capacity
per year
Status
Bonny
LNG
facility
Bonny
Island,
Rivers State
NNPC (49%), Shell(25.6%),
Total(15%) and Eni(10.4%)
1440 Bcf 6 operational
trains and 7th
under
construction.
Fully operational
Brass LNG
facility
Brass,
Bayelsa State
NNPC (49%), Total (17%),
ConocoPhillips (17%), Eni (17%)
480 Bcf 2 trains in their
engineering phase
West
African
Gas
Pipeline
(WAGP)
From lagos
state Nigeria
to Ghana
Operated by the West African Gas
Pipeline Company (WAPCO).
Chevron West African Gas
Pipeline Limited (36.7%), NNPC
(25%), Shell Overseas Holding
(18%), Takoradi Power Company
Limited (16.3%), Societe
Togolaise de Gaz (2%) and
Societe Togolaise BenGaz S.A
(2%)
170 MMcf 420 mile pipeline.
Intermittent
operations due to
supply
disruptions.
Trans-
Saharan
Gas
pipeline.
(TSGP)
From Nigeria
to Algeria
NNPC (58%) Sonatrach (42%)
with other interested parties
2500 miles
pipeline. The
major challenge is
security issues
along the pipeline
route
Table 10: Major natural gas export route (source: US EIA report on Nigeria)
27. 16
3 Methodology
3.1 The REACCESS project
In order to perform the analyses that represent the focus of this study, the forecasting
optimization TIMES-based energy model developed during the REACCESS project has been
used. The REACCESS (Risk of Energy Availability: Common Corridors for Europe Supply
Security) project was carried out under the 7th
Framework Programme of the European Union in
the years 2008-2011, and its aim was to model in a detailed way the present and possible/future
energy corridors – both captive and open sea, for the main energy commodities (i.e. crude oil,
natural gas, refined petroleum products, hard coal, biomass, nuclear material, electricity from
CSP, and hydrogen) – between the European Union and its main supply countries.
One of the most important characteristic of this project is the possibility of taking into account
the spatial dimension of the energy infrastructures: referring, for instance, to the pipelines, each
infrastructure is divided into a series of branches, thus clearly identifying and describing the
sections that cross a specific country or those that link two relevant hubs.
Furthermore, an Overall Risk Index, evaluated by means of a Factor Analysis, allows to quantify
the geopolitical reliability of each country; a Risk Index estimated as a composition of the
Overall Risk Indexes of the crossed countries is related to the supply branch (i.e. the last one) of
each corridor, thus allowing to calculate the risk related to the energy supply.
The model developed in the framework of the REACCESS model links three optimization
models, two existing (the Pan European TIMES, describing the whole energy system of 36
European countries, and the TIMES Integrated Assessment Model, that focuses on the energy
system of 15 Extra-EU world macro-areas) and one newly built (the REACCESS CORridord
model, that implements the above mentioned description and characterization of the energy
corridors supplying the European Union).
28. 17
In the next sections, a brief description of these models is exposed, together with the definition of
the main hypotheses at the basis of the scenarios defined for this work.
3.2 Identification and characterization of the supply corridors
All the technical and economical characteristics of each described energy corridor are collected,
for all the branches and shipping routes, into an Excel-based database, called Data Base
Template (DBT). This database is primarily composed of a set of Excel files, with each file
designated for different energy commodity group such as: crude oil, natural gas, nuclear and
hydrogen fuel, biomass, refined petroleum products, coal and electricity. For this case study the
primary energy resources supplied to the European Union or Continent from Nigeria are Crude
oil and Natural Gas in the form of Liquefied Natural Gas (LNG) and Liquefied Petroleum Gas
(LPG).
Each compositional file is made up of worksheets describing the stepwise origin-destination
structure of the supply corridors.
Figure 6: General structure of a DBT Excel file
The nucleus of each commodity-related DBT is the corridor sheet (named [commodity]_CORR)
which are either open sea links (from one export port to another import port) or captive links (a
series of segmented pipelines, submarine lines or railway connection), with full description of
present and future projected corridor links.
Each corridor is characterized by a series of segments connoted by five primary elements:
Resources Primary
Production
Export
Ports
Secondary
Production
Non EU
Corridors
EU
Corridors
Import
Ports
29. 18
1. CORR code
2. Start Country
3. End Country
4. End Name
Moreover each segment may be:
1. A country’s border to border pipeline segment
2. A border to country internal point segment
3. A point to border segment
4. A point to point segment
3.2.1 Open Sea Corridors
These are single connections between two ports which are feed by feeders (these are links
between primary source points such as wells and exits points such as port facility) from the field
or group of fields, of the supply country and the shipping ports. Thus if a country possesses more
ports, it’s possible to individuate them with more feeders from the same field and ending in the
individual ports. Figure 7 is an example of the coding system adopted for identifying an open
sea corridor. This kind of code, by introducing an identifier of the supply country, allows the full
traceability of a commodity, from the origin to the supply point.
Figure 7: Coding of segments for open sea corridors.
LNG_SHP_039_01_NIG
Commodity identifier
Type of transport medium
Corridor main code
Progressive number of segment
Origin identifier
30. 19
3.2.2 Captive Corridors
These are essentially pipelines whose identification may be rather complicated as a result
network nature of these connections. These may be grouped together into a common main name
whenever possible, for instance the West African Gas Pipeline.
Whenever a segment transcends a nation’s border, a supply name is given usually starting with
the nation’s entry point. The essence of this is to fully describe the delivery of the commodity to
the country and the link between the corridor’s models with the nation’s Reference Energy
System. These corridors possess the same feeder characteristics as with open sea corridors.
Figure 8: Coding of segments for captive corridors.
3.2.3 DBT Worksheets
For each segment and for each shipping route, the main DBT corridor worksheet
([commodity]_CORR) includes the following parameters:
Name
Length (in km)
Fuel-in (fuel in input)
Fuel-consumption (in PJ/PJ)
Capacity in the Base Year / in the Start Year (in PJ/)
Activity in the Base Year (in PJ/y)
Start year
Investment cost (in M€)
Variable operating and maintenance cost (in M€/y)
OIL_PIP_EU_008_NIG
Commodity identifier
Infrastructural type
Supply country
Corridor main code
Origin identifier
31. 20
Fixed operating and maintenance cost (in M€/y)
Life (in years)
Diameter (in inches)
In addition to this template, other worksheets are included into the DBT structure, in order to
fully describe the main extra-EU corridors, the availability of resources, the primary and the
secondary production. In particular:
1. Resource Sheet ([commodity]_RES): this contains the proven, probable and possible
resources of the oil and gas commodity as listed based on availability of information.
These values are gotten from internationally validated database such as the OPEC,
USGS, EIA, amongst others with integrations extracted from national data sources and
industrial sector companies.
2. Primary Production Sheet ([commodity]_PRIM): this sheet links the resource with the
corridor sheets. It contains vital information with regards to the capacities of the
representative field extracting infrastructures together with data on fluxes within the base
year. It also contains information on the extraction costs within each representative field.
3. ([Commodity]_CORR_NONE sheet: this contains important links between Extra EU
countries and also countries which supply the EU with oil supply trade.
4. Secondary Production sheet: this is an additional sheet that handles the liquefaction
process for natural gas taking into account the LNG plants associated to ports and their
capacities, as well as receiving ports with their capacities and sites of regasification.
Future expansion costs are provided also within this sheet.
3.3 Corridor modeling: the REACCESS CORridor (RECOR) structural base
All the above mentioned features described in the DBT are implemented in the TIMES model
RECOR, which thus details the present status and future projections of developmental corridors
routes with regards to the energy supply dynamics between source and receivers of energy
resources. This model ascribes and maintains the spatial attributes of the commodity routes, in
conjunction with technological, economical and environmental issues embodies in the scenarios.
32. 21
RECOR represents all the corridors embedded within the DBT and utilises both the technical-
economic and geographical information of the DBT. As already said in Section 3.2.1, the
adopted coding system allows the full traceability of the energy commodities. This is possible
also when a single infrastructure carries commodities with different origins (for instance, natural
gas from different extraction field) by introducing into the model two kinds of processes and a
specific constraint linking them. In particular, a set of Commodity Processes (one for each
origin), representing the topological link that is necessary for the traceability, and an
Infrastructure Process for each branch, characterised by the technical and economical
parameters (like capacity, investment cost, operating and maintenance cost, etc.) and having not
any input or output commodities are implemented. A constraint is used to link the total activity
carried by the Commodity Processes to the capacity of the Infrastructure Process:
Furthermore, each corridor is assigned a geo-political risk parameter, that will be more deeply
described in Section 3.4 and that reflects the level of reliability characterizing the source country
(f.i. Nigeria) which is the start point of the corridor and the transit countries (such as Algeria and
Tunisia, Italy, etc.) for both crude oil and LNG. Moreover, in the case of ships, this reflects
problems related to the choke points.
Referring to the aim of this study, Tables 11 and 12 show Nigeria-Europe supply corridors for
crude oil and the proposed natural gas pipeline route from Nigeria to Europe via Algeria
(planned for 2015) respectively.
From Table 12, the pipeline route under the Nigerian-Algerian sector is still undergoing
feasibility studies with regards to alternate routes, emanating from the fact that the region is froth
with security challenges. But if this can be overcome, it gives Europe an alternative energy
supply route from Russian monopoly thereby allowing competition in the market.
The REACCESS model incorporates inputs and results from the Pan European Times Model
(PET) and TIMES Integrated Assessment Model (TIAM) in the build up to the full
characterization of the model scenarios.
33. 22
Corr_Code Start_Country Start_Name End_Country End_Name Length (km) Chockepoints Year Corridor Name
fdrOIL_PIP_080 Nigeria Bonga Nigeria Brass Oil Port 175 0
175
OIL_SHP_080_01 Nigeria Brass Oil Port France Marseille Oil Port 7230 1
France Marseille Oil Port France Supply to France 1 0
7231
OIL_SHP_080_03 Nigeria Brass Oil Port France Le Havre Oil Port 7570 1
France Le Havre Oil Port France Supply to France 1 0
7571
OIL_SHP_082_01 Nigeria Brass Oil Port Italy Genova Oil Port_NIG 7520 1
Italy Genova Oil Port_NIG Italy Supply to Italy 19 0 CEP
OIL_PIP_EU_008_NIG Italy Genova Oil Port_NIG Italy Border Italy/Switzerland_NIG 220 CEP
OIL_SUP_EU_008_NIG Italy Border Italy/Switzerland_NIG Switzerland Supply to Switzerland_NIG 60 CEP
7819 1
OIL_SHP_082_03 Nigeria Brass Oil Port Italy Priolo Oil Port 7872 1
Italy Priolo Oil Port Italy Supply to Italy 1 0
7873
OIL_SHP_082_07 Nigeria Brass Oil Port Italy Trieste Oil Port_NIG 9008 1
Italy Trieste Oil Port_NIG Italy Supply to Italy 142 0
OIL_PIP_EU_001_01_NIG Italy Trieste Oil Port_NIG Italy Border Italy/Austria_NIG 126 TAL
OIL_SUP_EU_001_01_NIG Italy Border Italy/Austria_NIG Austria Supply to Austria_NIG 280 TAL
OIL_PIP_EU_001_02_NIG Italy Border Italy/Austria_NIG Austria Border Austria/Germany_NIG 121 TAL
OIL_SUP_EU_001_02_NIG Austria Border Austria/Germany_NIG Germany Supply to Germany_NIG 179 TAL
9856
OIL_SHP_083_01 Nigeria Brass Oil Port Netherlands Rotterdam Oil Port_NIG 7943 1
Netherlands Rotterdam Oil Port_NIG Netherlands Supply to Netherlands 20 0
OIL_PIP_EU_002_01_NIG Netherlands Rotterdam Oil Port_NIG Netherlands Border Netherlands/Belgium_NIG 150 Rotterdam-Antwerp Pipeline RAPL & ship
OIL_SUP_EU_002_01_NIG Netherlands Border Netherlands/Belgium_NIG Belgium Supply to Belgium_NIG 5 Rotterdam-Antwerp Pipeline RAPL & ship
8118
34. 23
OIL_SHP_084_01 Nigeria Brass Oil Port Sweden Goteborg Oil Port 8726 0
Sweden Goteborg Oil Port Sweden Supply to Sweden 2 0
8728
OIL_SHP_085_01 Nigeria Brass Oil Port UK Milford/P Oil Port 7493 0
UK Milford/P. Oil Port UK Supply to UK 1 0
7494
OIL_SHP_086_01 Nigeria Brass Oil Port Portugal Porto Oil Port 8825 0
Portugal Porto Oil Port Portugal Supply to Portugal 2 0
8827
OIL_SHP_087_02 Nigeria Brass Oil Port Spain Bilbao Oil Port 4076 0
Spain Bilbao Oil Port Spain Supply to Spain 4 0
4080
OIL_SHP_087_04 Nigeria Brass Oil Port Spain Cartagena Oil Port 2077 1
Spain Cartagena Oil Port Spain Supply to Spain 4 0
2081
Total Distance 79853
Table 11: Nigeria’s crude oil supply corridors to Europe.
35. 24
Corr_Code Start_Country Start_Name End_Country End_Name Length (km) Chockepoints Year Corridor Name
fdrNG_PIP_021_01 Nigeria Niger Delta Nigeria Border Nigeria/Niger 1037 2015 Trans Saharian Gas Pipeline
fdrNG_PIP_021_02 Nigeria Border Nigeria/Niger Niger Border Niger/Algeria 841 2015 Trans Saharian Gas Pipeline
fdrNG_PIP_021_03 Niger Border Niger/Algeria Algeria Hassi R'Mel_Hub_NIG 2310 2015 Trans Saharian Gas Pipeline
4188
NG_PIP_014_01_NIG Algeria Hassi R'Mel_Hub_NIG Algeria Border Algeria/Tunisia_NIG 550 1983 Transmed_NIG
NG_PIP_014_02_NIG Algeria Border Algeria/Tunisia_NIG Tunisia Cap Bon (coast)_NIG 370 1983 Transmed_NIG
NG_PIP_014_03_NIG Tunisia Cap Bon (coast)_NIG Italy Mazara del Vallo (coast)_NIG 155 1983 Transmed_NIG
NG_SUP_014_03_NIG Italy Mazara del Vallo (coast)_NIG Italy Supply to Italy_NIG 1000 1983 Transmed_NIG
2075
NG_PIP_014_04_NIG Italy Mazara del Vallo (coast)_NIG Italy Enna_NIG 1480 1983 Transmed_NIG
NG_PIP_014_05_NIG Italy Enna_NIG Italy Minerbio_NIG 200 1983 Transmed_NIG
NG_PIP_014_06_A_NIG Italy Minerbio_NIG Italy Border Italy/Switzerland_NIG 1280 2015
NG_SUP_014_06_A_NIG Italy Border Italy/Switzerland_NIG Switzerland Supply to Switzerland_NIG 466.5 2015
3427
NG_PIP_014_06_B_NIG Italy Minerbio_NIG Italy Border Italy/Slovenia_NIG 433 1983
NG_SUP_014_06_B_NIG Italy Border Italy/Slovenia_NIG Slovenia Supply to Slovenia_NIG 117 1983
550
NG_PIP_014_07_A_NIG Italy Border Italy/Switzerland_NIG Switzerland Lostorf_NIG 145 2015 Transitgas_NIG
NG_SUP_014_07_A_NIG Switzerland Lostorf_NIG France Supply to France_NIG 55 2015 Transitgas_NIG
200
NG_PIP_014_08_A_NIG Switzerland Lostorf_NIG Switzerland Border Switzerland/Germany_NIG 20 2015 Transitgas_NIG
NG_SUP_014_08_A_NIG Switzerland Border Switzerland/Germany_NIG Germany Supply to Germany_NIG 1 2015 Transitgas_NIG
21
NG_PIP_014_09_A_NIG Switzerland Border Switzerland/Germany_NIG Germany Border Germany/Belgium_NIG 485 2015 TENP_NIG
NG_SUP_014_09_A_NIG Germany Border Germany/Belgium_NIG Belgium Supply to Belgium_NIG 16 2015 TENP_NIG
501
NG_PIP_015_01_NIG Algeria Hassi R'Mel_Hub_NIG Algeria Border Algeria/Morocco_NIG 515 1996 Pedro Duran Farrel_NIG
NG_PIP_015_02_NIG Algeria Border Algeria/Morocco_NIG Morocco Strait of Gibraltar (M) (coast)_NIG 522 1996 Pedro Duran Farrel_NIG
NG_PIP_015_03_NIG Morocco Strait of Gibraltar (M) (coast)_NIG Spain Strait of Gibraltar (S) (coast)_NIG 45 1996 Pedro Duran Farrel_NIG
NG_PIP_015_04_NIG Spain Strait of Gibraltar (S) (coast)_NIG Spain Border Spain/Portugal_NIG 269 1996 Pedro Duran Farrel_NIG
1351
NG_SUP_015_04_NIG Spain Strait of Gibraltar (S) (coast)_NIG Spain Supply to Spain_NIG 400 1996 Pedro Duran Farrel_NIG
400
NG_SUP_015_05_NIG Spain Border Spain/Portugal_NIG Portugal Supply to Portugal_NIG 269 1996 Pedro Duran Farrel_NIG
Nigeria Pipeline export Route
36. 25
NG_PIP_019_01_NIG Algeria Hassi R'Mel_Hub_NIG Algeria Beni Saf (coast)_NIG 550 2009 Medgaz_NIG
NG_PIP_019_02_NIG Algeria Beni Saf (coast)_NIG Spain Almeria (coast)_NIG 280 2009 Medgaz_NIG
NG_SUP_019_04_NIG Spain Almeria (coast)_NIG Spain Supply to Spain_NIG 320 2009 Medgaz_NIG
1150
NG_PIP_020_01_NIG Algeria Hassi R'Mel_Hub_NIG Algeria El Kala (coast)_NIG 640 2019 Galsi_NIG
NG_PIP_020_02_NIG Algeria El Kala (coast)_NIG Italy Cagliari (coast)_NIG 45 2019 Galsi_NIG
NG_SUP_020_04_NIG Italy Cagliari (coast)_NIG Italy Supply to Italy_NIG 45 2019 Galsi_NIG
730
Total Distance pipeline Direct 14862
fdrNG_SHP_033_A_NIG Algeria Hassi R'Mel_Hub_NIG Algeria Arzew Liquefaction Plant_NIG 480 1978
LIQ_NG_SHP_033_A_NIG Algeria Arzew Liquefaction Plant_NIG Algeria Arzew LNG Port_NIG
480
fdrNG_SHP_033_B_NIG Algeria Hassi R'Mel_Hub_NIG Algeria Skikda Liquefaction Plant_NIG 570 1978
LIQ_NG_SHP_033_B_NIG Algeria Skikda Liquefaction Plant_NIG Algeria Skikda LNG Port_NIG
570
LNG_SHP_033_01_NIG Algeria Arzew LNG Port_NIG Belgium LNGREGAS_BE_NIG 2875 1
Belgium LNGREGAS_BE_NIG Belgium Supply to Belgium_NIG
2875
LNG_SHP_033_02_NIG Algeria Skikda LNG Port_NIG Belgium LNGREGAS_BE_NIG 3495 1
Belgium LNGREGAS_BE_NIG Belgium Supply to Belgium_NIG 100
3595
LNG_SHP_034_01_NIG Algeria Arzew LNG Port_NIG France LNGREGAS_FR-M_NIG 975 0
France LNGREGAS_FR-M_NIG France Supply to France_NIG
975
LNG_SHP_034_03_NIG Algeria Skikda LNG Port_NIG France LNGREGAS_FR-M_NIG 2880 1
France LNGREGAS_FR-M_NIG France Supply to France_NIG 430
3310
LNG_SHP_034_02_NIG Algeria Arzew LNG Port_NIG France LNGREGAS_FR-A_NIG 913 0
France LNGREGAS_FR-A_NIG France Supply to France_NIG
913
LNG_SHP_034_04_NIG Algeria Skikda LNG Port_NIG France LNGREGAS_FR-A_NIG 3570 1
France LNGREGAS_FR-A_NIG France Supply to France_NIG 360
3930
LNG_SHP_035_01_NIG Algeria Arzew LNG Port_NIG Greece LNGREGAS_GR_NIG 2310 0
Greece LNGREGAS_GR_NIG Greece Supply to Greece_NIG
2310
LNG_SHP_035_02_NIG Algeria Skikda LNG Port_NIG Greece LNGREGAS_GR_NIG 1651 0
Greece LNGREGAS_GR_NIG Greece Supply to Greece_NIG 75
1726
Algeria Hassi R'Mel Hub To Algerian Liquefaction plants
38. 27
fdrNG_SHP_059 Nigeria Bonny Island Nigeria Bonny Island Liquefaction Plant 20
LIQ_NG_SHP_059 Nigeria Bonny Island Liquefaction Plant Nigeria Bonny Island LNG Port
LNG_SHP_059_01 Nigeria Bonny Island LNG Port France LNGREGAS_FR-M 7378 1
France LNGREGAS_FR-M France Supply to France 430
7828
LNG_SHP_059_02 Nigeria Bonny Island LNG Port France LNGREGAS_FR-A 7361 0
France LNGREGAS_FR-A France Supply to France 360
7721
LNG_SHP_060 Nigeria Bonny Island LNG Port Portugal LNGREGAS_PT 6163 0
Portugal LNGREGAS_PT Portugal Supply to Portugal 220
6383
LNG_SHP_061_01 Nigeria Bonny Island LNG Port Spain LNGREGAS_ES-M 7145 1
Spain LNGREGAS_ES-M Spain Supply to Spain 320 1
7465
LNG_SHP_061_02 Nigeria Bonny Island LNG Port Spain LNGREGAS_ES-A 7220 0
Spain LNGREGAS_ES-A Spain Supply to Spain 220
7440
LNG_SHP_096_01 Nigeria Bonny Island LNG Port Italy LNGREGAS_IT-W 7737 1
Italy LNGREGAS_IT-W Italy Supply to Italy 250
7987
LNG_SHP_096_02 Nigeria Bonny Island LNG Port Italy LNGREGAS_IT-E 9400
Italy LNGREGAS_IT-E Italy Supply to Italy 260
9660
LNG_SHP_103 Nigeria Bonny Island LNG Port Germany LNGREGAS-DE 7361 0
Germany LNGREGAS-DE Germany Supply to Germany 360
7721
Total Distances direct port 62205
Nigeria Direct Field-Port exports (incountry)
Table 12: Nigeria’s natural gas and LNG supply routes to Europe.
39. 28
3.4 The Pan European TIMES Model
This model represents the whole energy system of 36 European Countries (the twenty-eight
Member States of the European Union, plus Norway, Switzerland, Iceland and the Balkan
Countries) and its possible long term development. It incorporates two complementary sets of
system elements: the technical aspects and economic aspects, while retaining the characteristics
properties of the system elements.
The PET is a partial equilibrium model based on the TIMES model generator, which assumes
that the system develops while retaining the intra-temporal and inter-temporal dynamic partial
economic equilibrium and predisposes the technical aspects. This assumption is detrimental to
environmental and energy aspects of the model, where for instance OPEC and consumers do not
have the same footing as the former influences the oil price; thus leaving the latter at its mercy.
Based on this, the model is run in modes therefore relaxing the purely economic equilibrium
assumptions.
Generally speaking all technologies available in the model were validated, checked and
improved upon with addition of foreseen new technologies.
Figure 9 shows a schematic representation of the Reference Energy System for the PET model.
40. 29
Figure 9: Schematic representation of the Reference Energy System for the PET model.
(Source: KanORS-ERM website: http://www.kanors-emr.org/Website/Models/PET/Mod_PET.asp)
3.5 The TIAM TIME Model
The TIMES Integrated Assessment Model (TIAM) is a multiregional partial equilibrium model
of the entire world divided into regions.
The model version adopted in the REACCESS project describes and characterise the whole
energy system of 15 macro-areas of the world (Africa, Australia, Canada, Central Asia and
Caucasus, Central and Southern America, China, India, Japan, Mexico, Middle East, Russia,
Other Developing Asian countries, Other Eastern Europe, South Korea, USA). In comparison
with the original version, the European region has been removed and substituted by the detailed
representation of the PET model.
Furthermore, the simplified trade processes of the TIAM model (as well as those of the PET
model) have been substituted by the corridor description of the RECOR model.
41. 30
Figure 10 shows the general scheme of the Reference Energy System of the TIAM model.
Figure 10: Schematic representation of the Reference Energy System for the TIAM model.
(Source: KanORS-ERM website: http://www.kanors.com/DCM/TIAM_World/Docs)
3.6 Evaluation and implementation of the Risk parameters
The uniqueness of REACCESS is in its inclusion of risks to the techno-economic models.
Sources of risks associated with energy supply are varied, ranging from equipment failure,
purposeful truncation of supply by the supplier or source country, amongst other things. Based
on this fact, risk is categorized into two main groups to highlight their unique origin or causes
and their consequence on the supply chain:
42. 31
3.6.1 Socio-economic risk factors: Factor Analysis
This covers all energy-specific, political, economic and socio variables that influences the
reliability of the exporting and transiting regions or countries, that characterize the supply
corridor to the European market which in turn is tied to individual countries.
In reality these variable are not observable, but are entrenched within the data set of each country
and are characterized by a common factor as shown in Figure 11
Figure 11: Common factors shared by different variables (Source: REACCSS - Summary report on ‘Risk of Energy
Availability Common Corridors for Europe Supply Security’)
Thus factor analysis is used to compute or evaluate the common co-variance between different
variables and tying it to a common factor. This analytical method of factor correspondence also
allows for the evaluation of variable weight or importance, in relation to the relevant factor in
question and assigning a factor score to the elements contained within the sample (13)
. Figure 12
gives a summary breakdown of the inner workings of factor analysis.
43. 32
Figure 12: Selection of variables, time aggregation and factor analysis (Summary report on ‘Risk of Energy Availability
Common Corridors for Europe Supply Security’).
The final factor analysis result is a breakdown into four (4) energy risk indexes by country which
is summarized into one overall energy risk index as shown in Figure 13
Figure 13: Factor scores, Indexes and Overall Risk
Computation (Summary report on ‘Risk of Energy Availability Common Corridors for Europe Supply Security’)
44. 33
Figure 14 shows the results of the overall energy risk index by country on a global scale.
Figure 14: Map of the overall socio-economic energy risk index
(Summary report on ‘Risk of Energy Availability Common Corridors for Europe Supply Security’)
3.6.2 Technology risk factors
This is risk associated with technologies evaluated within the model, which in turn increases the
overall cost of the system. Usually this is carried out in two phases:
1) Risk evaluation for people due to accident and failures or natural events;
2) Unavailability evaluation, which is a probabilistic evaluation of the average annual loss of
production due to accidents, failures and technical restoration of failures or accidents (13b)
.
The ideology is to evaluate as practicable as possible the resultant of the afore mentioned
evaluation with respect to the supply corridors, for all the infrastructures and commodities taken
into account in the RECOR model.
Risk evaluation is based on a three-term equation with evidence of the following:
1) The frequency of occurrence of undesired events;
45. 34
2) The effects of the undesirable event i.e. irreversible damage to the environment, loss of
lives, etc.;
3) The vulnerability- the probability that the effects can lead to damage.
The effects of technological risk are some order of magnitude lower than those due to the geo-
political risk described in section 3.4.1. As a consequence, only the socio-economic overall risk
indexes have been implemented into the model(13)
.
3.7 Risk Implementation
The original implementation of the risk parameter into the RECOR model, carried out during the
REACCESS project – that will not be described in a detailed way – involved the so called “min-
max procedure”, which is based on three steps:
1) A minimization the total system cost
2) A minimization of the risk value, with a constraint on the total system cost
where α is a suitable percentage (f.i., 2%)
3) A minimization of the total system cost, with a constraint on the risk value
where β is a suitable percentage (f.i., 1%)
The Risk value, that converts the socio-political risk to the energy risk, is evaluated starting from
the parameter called Quantity of Risk Weighted Energy and defined by the following
relationship:
46. 35
Where f: fuel category: it represents either crude oil ship, LNG ship, crude oil pipeline or
natural gas pipeline.
sf: index designating one by one all segments and branches of corridors carrying
fuels in the fuel category f from country ra to Europe.
ra: country where each segment leaves and supplies the fuel in the category f
y: model year
Q: energy import flow of fuel category f (in PJ) from region ra through corridor s.
R: socio-political risk associated with the departure country ra.
QRE Quantity of Energy at Risk
In the follow-up phase of the project a new procedure for the risk related to each energy corridor
was defined and implemented, threating the risk as a CO2 emission; this study is based on this
second approach to the risk evaluation.
For each supply process (i.e. the last process of a corridor chain), a risk parameter called Risk
Probability of Failure is defined. This parameter is evaluated as a composition of the overall risk
indexes of the crossed countries by means of an application of elementary reliability theory for
series networks (14)
and can be interpreted as the likelihood that a corridor crossing a country will
fail. As a consequence, referring to three crossed countries, the probability of success of the
corridor is the product of the probabilities of success of the 3 crossed countries, assumed
independent, and the risk value is given by:
Where Ri (i=1,2,3) Overall Risk Index of the traversed country
In order to calculate the risk value related to the supply, three additional commodities are
implemented:
47. 36
RiskPoF: it is defined for each supply branch of the corridor C and it is evaluated by
multiplying the above described risk parameter RC,PoF by the activity delivered to the
demand country, according to the following relationship;
TotPoFRisk: it corresponds to the total risk related to the supply by energy corridors for a
country and it is calculated, for each demand country, as the sum of all the RiskPoF values;
TotPoFRiskEU: it is the sum of all the RiskPoF values for each of the 28 EU’s Member
States.
The implementation of constraints on these risk commodities allows to perform scenario runs. In
particular, in the present study a scenario simulating a risk reduction policy at European level has
been defined and analysed.
Furthermore, another indicator has been taken into account, i.e. the Specific Risk, which is
defined as the ratio between the total risk value and the total activity (measured in PJ/y) and is
able to quantify the risk related to the single PJ/y delivered to the analysed country.
48. 37
4 Scenarios, results and analysis
4.1 Scenario hypotheses
The results obtained from the system analysis tool (VEDA) for the scenarios implemented into
the RECOR model are based on the following matrix hypothesis:
Scenario Risk Reduction CO2 Emissions Reduction Constraint
Baseline - -
CO2 Reduction 15% -
15% reduction of the Total CO2
Emission value for the EU 28 with
respect to the baseline value from
2015 to 2040
Fix (FX) Type
constraint on TOTCO2
commodity
Risk Reduction 15%
15% reduction of the Total Risk
value for the EU 28 with respect
to the baseline value from 2015
to 2040
-
Fix (FX) Type
constraint on
TotRiskPoFEU
commodity
Table 13: Hypothesis Matrix for Nigeria Energy Supply
The Baseline scenario is the tagged the do nothing scenario: it is based on the assumption that
the current technology is sufficient enough to address the inadequacies of the Nigerian energy
supply corridor to Europe and the Rest of the world (ROW). This scenario also assumes that all
supply networks are in place and there are no particular policies on the environment (like CO2
emissions reduction) or on the risk related to the supply.
The other two scenarios involve placing constraints on the baseline scenario, assuming
alternatively a 15% reduction in CO2 emissions or in the risk commodity value at the level of
European Union. The total effects of these constraints on the energy supply for the base year and
in the other milestone year (2015, 2020, 2025, 2030, and 2040) are evaluated.
49. 38
4.2 Natural gas results and analysis
Table 14 shows the result for Natural gas supply to the European Union from Nigeria:
Scenario Region ProcessPeriod Supply Country 2010 2015 2020 2025 2030 2040
Baseline ES NG_SUP_015_04_NIG-ES Nigeria 0.0 328.9 431.3 550.0 559.6 802.1
Baseline ES NG_SUP_019_04_NIG-ES Nigeria 0.0 67.9 128.7 199.2 281.0 427.6
Baseline FR NG_SUP_014_07_A_NIG Nigeria 0.0 0.0 50.0 108.0 168.2 276.0
Baseline IT NG_SUP_020_04_NIG-IT Nigeria 0.0 0.0 0.0 50.0 33.0 14.3
Baseline PT NG_SUP_015_05_NIG Nigeria 0.0 0.0 0.0 50.0 33.0 76.8
0.0 396.8 610.0 957.2 1074.7 1596.8
CO2 Reduction 15% ES NG_SUP_015_04_NIG-ES Nigeria 0.0 220.2 265.0 357.2 448.3 652.5
CO2 Reduction 15% ES NG_SUP_019_04_NIG-ES Nigeria 0.0 67.9 128.7 199.2 281.0 427.6
CO2 Reduction 15% FR NG_SUP_014_07_A_NIG Nigeria 0.0 0.0 50.0 108.0 175.2 285.4
CO2 Reduction 15% IT NG_SUP_014_03_NIG-IT Nigeria 0.0 0.0 0.0 11.0 7.2 3.1
CO2 Reduction 15% IT NG_SUP_020_04_NIG-IT Nigeria 0.0 0.0 0.0 50.0 33.0 14.3
CO2 Reduction 15% PT NG_SUP_015_05_NIG Nigeria 0.0 0.0 0.0 50.0 58.9 129.1
0.0 288.1 443.7 775.4 1003.5 1512.1
Total Supply by corridor to EU28- Baseline
Total Supply by corridor to EU28- CO2Reduction 15%
European Union Natural Gas Energy Supply in PJ/y
Risk Reduction 15% ES NG_SUP_015_04_NIG-ES Nigeria 0.0 39.2 95.5 160.7 236.3 330.7
Risk Reduction 15% ES NG_SUP_019_04_NIG-ES Nigeria 0.0 0.0 50.0 108.0 175.2 285.4
Risk Reduction 15% FR NG_SUP_014_07_A_NIG Nigeria 0.0 0.0 0.0 50.0 108.0 195.1
Risk Reduction 15% IT NG_SUP_014_03_NIG-IT Nigeria 0.0 0.0 0.0 50.0 57.4 25.0
Risk Reduction 15% IT NG_SUP_020_04_NIG-IT Nigeria 0.0 0.0 0.0 0.0 50.0 21.7
Risk Reduction 15% PT NG_SUP_015_05_NIG Nigeria 0.0 0.0 7.9 59.2 82.7 96.7
0.0 39.2 153.4 427.8 709.5 954.5Total Supply by corridorto EU28- RiskReduction 15%
Table 14: Result Nigeria’s natural gas supply simulation to the EU for the next 30 years
The absence of data for the base year 2010 is based on the fact that this natural gas meant to be
piped to the European Union via the Trans-Saharan Gas Pipeline (TSGP), is froth with security
challenges along the Nigeria/Niger-Niger/Algerian pipeline axis. Its initial take off date was
supposed to be 2015. But pending the outcome of the resolution of these problems amongst
others politically holdups, the project has been put on hold temporarily.
50. 39
Figure 15: Growth projection of natural gas supply via TSGP
Assuming infrastructural plans meet scheduled deadlines, Nigeria’s energy supply to the EU is
expected to rise four hundred percent (400%) over the next thirty years as shown in figure 10 by
the blue trending line on the graphical plot of growth profile.
Imposing CO2 emissions and Risk reduction on the model, it can be seen that the effects of risks
reduction has more significant effects on the projected growth profile with a reduction of the
energy supply projection of 396.8 PJ/y for the base year 2015 at projected start up of the project
in the Baseline scenario to 39.2 PJ/y for the same period, and other subsequent periods.
The linear stabilization points between 2015 and 2020 of the risk constrained Baseline is
associated with the initial startup phase of the pipeline supply (the learning and turning-up
phase), this is followed by the a second linear stabilization making the incremental European
energy demand with available technology for the next 10 years and reduction in the risk index all
things being equal. And finally with subtle decline in energy demand from Europe as new
technologies come into phase in tandem with associated risks.
51. 40
The effect of CO2 bounds on the baseline supply doesn’t significantly affect the energy supply to
Europe. It generally follows the trend profile of the baseline scenario with little variations.
4.3 Liquefied Natural Gas (LNG) results and analysis
4.3.1 The European Union Axis
The demand for LNG being shipped from Nigeria to Europe is set to decline, particularly with
the projected startup of the TSGP; as shown by Table 15 and Figure 16.
Scenario Region ProcessPeriod SupplyCountry 2010 2015 2020 2025 2030 2040
Baseline ES LNG_SHP_061_01 Nigeria 0.0 0.0 0.0 0.0 0.0 0.0
Baseline ES LNG_SHP_061_02 Nigeria 280.8 185.0 122.0 80.4 53.0 23.0
Baseline FR LNG_SHP_059_01 Nigeria 0.0 0.0 0.0 0.0 0.0 0.0
Baseline FR LNG_SHP_059_02 Nigeria 145.1 95.6 63.0 41.5 27.4 11.9
Baseline PT LNG_SHP_060 Nigeria 109.2 117.4 77.4 97.8 90.2 39.2
Baseline UK LNG_SHP_039_01_NIG Nigeria 0.0 0.0 0.0 42.4 27.9 12.1
Baseline UK LNG_SHP_039_03_NIG Nigeria 0.0 0.0 50.0 108.0 71.2 94.0
535.1 398.1 312.4 370.1 269.6 180.2TotalSupplybycorridortoEU28-Baseline
Nigeria'sLNGsupplytoEuropeinPJ/y
CO2Reduction15% ES LNG_SHP_061_01 Nigeria 0.0 0.0 0.0 0.0 0.0 0.0
CO2Reduction15% ES LNG_SHP_061_02 Nigeria 280.8 185.0 122.0 80.4 53.0 23.0
CO2Reduction15% FR LNG_SHP_059_01 Nigeria 0.0 0.0 0.0 0.0 0.0 0.0
CO2Reduction15% FR LNG_SHP_059_02 Nigeria 145.1 95.6 63.0 41.5 27.4 11.9
CO2Reduction15% PT LNG_SHP_060 Nigeria 109.2 176.6 116.4 76.7 50.6 22.0
CO2Reduction15% UK LNG_SHP_039_01_NIG Nigeria 0.0 0.0 50.0 33.0 21.7 9.4
CO2Reduction15% UK LNG_SHP_039_03_NIG Nigeria 0.0 104.2 170.7 247.9 323.7 485.0
535.1 561.5 522.1 479.5 476.4 551.4
RiskReduction15% ES LNG_SHP_061_01 Nigeria 0.0 0.0 0.0 0.0 0.0 0.0
RiskReduction15% ES LNG_SHP_061_02 Nigeria 280.8 185.0 122.0 80.4 53.0 23.0
RiskReduction15% FR LNG_SHP_059_01 Nigeria 0.0 0.0 0.0 0.0 0.0 0.0
RiskReduction15% FR LNG_SHP_059_02 Nigeria 145.1 95.6 63.0 41.5 27.4 11.9
RiskReduction15% PT LNG_SHP_060 Nigeria 109.2 174.5 220.0 185.9 164.3 71.4
RiskReduction15% UK LNG_SHP_039_03_NIG Nigeria 0.0 0.0 0.0 2.2 52.6 120.6
535.1 455.1 405.0 310.0 297.2 226.9
TotalSupplybycorridortoEU28-CO2Reduction15%
TotalSupplybycorridortoEU28-RiskReduction15%
Table 15: Nigerian LNG energy supply to the European Union over the next 30year period.
52. 41
Figure 16: Graphical plot of Nigeria’s LNG supply to Europe over the next 30 years.
An imposition of CO2 constraints at European level causes an increase in the LNG imports of the
EU28 from Nigeria, as compared to the baseline and risk reduction scenarios. This is can based
on environmental concerns due to global warming amongst other factors and can be related to a
general decrease in the use of solid fuels and oil.
But generally, there is decline in the demand for energy resources from over the next 30 years,
which may be tied to shipping costs, operational costs of regasification plants at entry points into
Europe. However, an improvement in risks socially, politically and technologically greatly
improves the demand, despite the fact that the overall demand profile is in recession.
53. 42
4.3.2 The Rest of the world (ROW) Axis
Scenario Region ProcessPeriod SupplyCountry 2010 2015 2020 2025 2030 2040
Baseline CHI LNG_SHP_063 Nigeria 6.7 4.4 2.9 1.9 1.3 0.6
Baseline IND LNG_SHP_064 Nigeria 12.9 64.9 125.3 195.2 276.3 421.3
Baseline JPN LNG_SHP_065 Nigeria 32.7 21.5 14.2 9.4 6.2 2.7
Baseline MEX LNG_SHP_058 Nigeria 87.0 57.3 37.8 24.9 16.4 7.1
Baseline ODA LNG_SHP_067 Nigeria 42.5 28.0 18.5 12.2 8.0 3.5
Baseline SKO LNG_SHP_066 Nigeria 46.1 103.4 68.1 44.9 29.6 12.9
Baseline USA LNG_SHP_057 Nigeria 46.0 30.3 20.0 13.2 8.7 3.8
273.9 310.0 286.8 301.7 346.5 451.8
CO2Reduction15% CHI LNG_SHP_063 Nigeria 6.7 4.4 2.9 1.9 1.3 0.6
CO2Reduction15% IND LNG_SHP_064 Nigeria 12.9 64.9 125.3 195.2 276.3 421.3
CO2Reduction15% JPN LNG_SHP_065 Nigeria 32.7 21.5 14.2 9.4 6.2 2.7
CO2Reduction15% MEX LNG_SHP_058 Nigeria 87.0 57.3 37.8 24.9 16.4 7.1
CO2Reduction15% ODA LNG_SHP_067 Nigeria 42.5 28.0 18.5 12.2 8.0 3.5
CO2Reduction15% SKO LNG_SHP_066 Nigeria 46.1 103.4 68.1 44.9 29.6 12.9
CO2Reduction15% USA LNG_SHP_057 Nigeria 46.0 30.3 20.0 13.2 8.7 3.8
273.9 310.0 286.8 301.7 346.5 451.8
RiskReduction15% CHI LNG_SHP_063 Nigeria 6.7 4.4 2.9 1.9 1.3 0.6
RiskReduction15% IND LNG_SHP_064 Nigeria 12.9 64.9 125.3 195.2 276.3 421.3
RiskReduction15% JPN LNG_SHP_065 Nigeria 32.7 21.5 14.2 9.4 6.2 2.7
RiskReduction15% MEX LNG_SHP_058 Nigeria 87.0 57.3 37.8 24.9 16.4 7.1
RiskReduction15% ODA LNG_SHP_067 Nigeria 42.5 28.0 18.5 12.2 8.0 3.5
RiskReduction15% SKO LNG_SHP_066 Nigeria 46.1 103.4 68.1 44.9 29.6 12.9
RiskReduction15% USA LNG_SHP_057 Nigeria 46.0 30.3 20.0 13.2 8.7 3.8
273.9 310.0 286.8 301.7 346.5 451.8
Total SupplybycorridortoRestof the World- Baseline
Total SupplybycorridortoRestof the World- CO2Reduction15%
Total SupplybycorridortoRestof the World- RiskReduction15%
NigeriaLNG supplytothe restof the WorldinPJ/y
Table 16: Nigerian LNG energy supply to the Rest of the World in the next 30year period
Careful analysis of the energy supply to the United States and Japan via LNG_SHP_057 and
LNG_SHP_065 in Table 16 respectively are projected to decline; this maybe due improvement
in extraction technology of tight gas and shale gas for United Stated, and the development of
new energy sources by the Japanese as well as new gas finds in the disputed china sea
respectively.
54. 43
Either way this does not affect the general outlook on the energy demand from Nigeria, as their
respective slots of energy supply is overtaken by India huge demand for energy over the
projected simulation period, thereby increasing the supply outlook as shown in Figure 17.
Figure 17: Graphical plot of Nigeria’s LNG supply to the rest of the world (ROW) over the next 30 years.
Imposition of constraints on the energy supply to the rest of the world has no wanton effect on
the overall energy outlook; demand for Nigeria energy supply with respect to LNG is expected to
rise. This is partly due to emerging power economies such as India.
In comparison to the Europe outlook (see Section 4.3.1), LNG supply is expected to shift
towards the Indo-Asian subcontinent following then principles of demand and supply.
58. 47
Figure 19: Nigeria’s crude oil supply to the rest of the world (ROW)
Analysis of the graph for crude oil to Europe (Figure 18) shows a steady decline over the next 30
years which might signal the onset of greener technology with respect to presently available
technology. As compared to that of the rest of the world in Figure 19, there is projected to be a
peak oil demand in the year 2025. This is followed by a steady decline in over the next few
years.
More so this steady decline in crude oil demand from Nigeria may arise from the fact that most
Nigeria oil fields have passed their peak production. Thus there is every possibility that crude oil
production will start waning over time, if new fields are not being discovered to augment present
stock of supply.
However imposition of constrains, be it reduction of CO2 emission by 15% or risk reduction by
15% has no effect on the projected out come. Though it is expected risk reduction particularly
59. 48
technological risk is contained within the new extractive technologies coming on-stream with
respect to crude oil extraction in increasingly complex terrains.
4.5 Comparative outlook of Nigeria’s total exports
Figure 20: Nigeria’s total energy export
Generally speaking, Nigeria’s total energy export is set to peak in the year 2020 (as shown in
Figure 20); after which it is declines relatively linearly. This could tentatively be due to the
following reasons:
1) Emergence of greener technologies requiring less energy input.
2) Declining oil field production with respect to oil production. This based on the fact that the
energy throughput of oil as against natural gas (both as piped natural gas and LNG) is over
four times higher than latter as shown in Table 19 (Appendix I); even in the face of rising
gas demand.
3) The coming on-stream of the proposed Trans-Saharan Gas Pipeline assuming all
challenges are dealt with accordingly; as an alternative to shipping.
60. 49
4.6 Risk analysis
Figure 21: Total EU risk against EU risk associated to the Nigerian energy supply corridor
Comparative analysis of figure 21 shows that the overall risk of energy supply from the Nigerian
corridor as against other energy supply corridor to the European Union is remarkably low; even
when import constraints are placed on the Nigerian exports. This goes to show that there exists a
viable market for the country (Nigeria), if all amenities to tap into this venture can be harnessed
judiciously.
Table 19 indicates that the overall contribution of Nigeria supply risk to the overall EU total
supply risk is below in the near –midterm time frame, generally below 5%.
61. 50
Risk Scenario 2010 2015 2020 2025 2030 2040
Baseline 79734.6 92923.1 99108.1 131473.6 130238.4 170225.4
CO2Reduction 15% 79734.6 95123.8 100784.0 124775.9 143882.3 196800.4
Risk Reduction 15% 79734.6 61767.5 58349.0 72071.4 95032.5 111841.8
Baseline 2724387.6 3373950.8 3519897.2 3739140.7 3919768.3 4169492.8
CO2Reduction 15% 2724387.6 3358762.7 3346364.3 3466589.5 3666284.2 3976262.1
Risk Reduction 15% 2724387.6 2867858.2 2991912.6 3178269.6 3331803.1 3544068.9
Baseline 2.9 2.8 2.8 3.5 3.3 4.1
CO2Reduction 15% 2.9 2.8 3.0 3.6 3.9 4.9
Risk Reduction 15% 2.9 2.2 2.0 2.3 2.9 3.2
EU28risk related to the supply from Nigeria
Total EU28risk related to the supply by
corridors
Ratio (%) - Nigerian contribution to total
EU28Risk
Table 19: Nigerian contribution to the European Risk
4.6.1 Specific Risk for Europe
The specific risk for all the energy commodities delivered to the European Union from Nigeria,
according to the general definition given in Section 3.4.2, can be calculated as the ratio between
the total risk value related to the supply from Nigeria and the total activity delivered by the
corridors linking Nigeria and the EU.
Tables 20, 21 and 22 gives the total energy supply to Europe from Nigeria, total risk to the EU
via the Nigerian corridor and the specific risk of the EU via the Nigerian corridor, respectively.
Total Energy Supply by corridors from Nigeria to EU28 (PJ/y)
2010 2015 2020 2025 2030 2040
Baseline 1433 1386 1312 1584 1514 1851
CO2 Reduction 15% 1433 1441 1356 1512 1649 2137
Risk Reduction 15% 1433 1086 948 995 1176 1255
Table 20: Total energy supply from Nigeria to Europe
Total Risk for EU28 related to corridors starting from Nigeria
2010 2015 2020 2025 2030 2040
Baseline 79735 92923 99108 131474 130238 170225
CO2 Reduction 15% 79735 95124 100784 124776 143882 196800
Risk Reduction 15% 79735 61767 58349 72071 95033 111842
Table 21: EU28 risk related to supply from Nigeria
62. 51
EU28 specific risk related to the supply from Nigeria
Scenario 2010 2015 2020 2025 2030 2040 Average EU risk
Baseline 55.7 67.0 75.5 83.0 86.0 92.0 76.5
CO2 Reduction 15% 55.7 66.0 74.3 82.5 87.2 92.1 76.3
Risk Reduction 15% 55.7 56.8 61.5 72.5 80.8 89.1 69.4
Table 22: EU28 specific risk related to supply from Nigeria
The specific risk associated with the risk reduction scenario is comparatively low (approximately
69%) as compared to that associated with the baseline and CO2 reduction scenarios; which stand
at 77% and 76% respectively.
Figure 22: EU28 specific risk related to supply from Nigeria
The analysis of Figure 22 indicates that as the specific risk for the EU28 increases, so also the
other simulation scenarios’ specific risk increases. This borne out of the fact that some receiver
countries such as Spain, Denmark, Portugal and France are characterized by high total risk for
crude oil supply via ships from Nigeria, as compared to other countries (see Appendix 3). Thus
reduction of the overall supply risk from Nigeria via alternative routes for oil or the likes, will go
63. 52
a long way in bringing down the specific risks, and also boosting supplies to the European
Union.
4.7 CO2 emissions
Indications from Tables 27 and 28 in Appendix 8 and 9 shows that transportation via ship to the
European Union generates far more CO2 for LNG than crude oil by a ratio of approximately
8.3:1 within each model time frame.
Figure 23; CO2 emissions from energy transport from Nigeria to the European Union in Kton/y
Considering the CO2 output graph of Figure 23, the baseline scenario still produces less CO2
emissions as compared to the other scenarios probably because ships are still being used to ferry
the energy goods. Thus placing constraints on the amount of CO2 transport ships produce could
either result in reduction in the amount of energy commodities delivered to receiver countries.
This implies that heavy energy resource cargo which can be delivered by one ship will have to be
64. 53
either divided amongst smaller ships which are energy efficient, therefore requiring multiple
journeys.
The most probable alternative would be to pipe the energy resources or goods to their required
destination in Europe; which leaves less environmental footprint on the supply routes
undertaken.
4.8 Effects of bounds on the Marginal cost of Energy to the EU from Nigeria
Marginal cost is defined as the change in total cost that arises when the quantity produced has an
increment by a unit. It is given by the formula:
Marginal cost (MC) =
Where = change in total cost, and = change in quantity.
Compositional analysis of Appendix 7, which indicates the marginal cost of energy supply from
Nigeria to EU countries, shows that Cyprus, Estonia, Luxembourg and Malta possess the highest
marginal cost natural gas energy supply within the EU. This could be theoretical due to the
distance from product receiver ports coupled with the additional European intra-continental cost
of supplying the receiving country. Malta is a peculiar case for Nigerian supply because of its
close proximity to the African continent, as such its high marginal cost could stem from the fact
that the Trans-Saharan Gas Pipeline (TSGP) is not operational. Thus supply from Nigeria will
have to routed through other receiver ports, thereby raising the overall costs and marginal cost.
65. 54
Figure 24: Average marginal cost comparison of EU28 supply from Nigeria
From analysis of Figure 24, the overall average marginal cost of natural gas is by far greater than
that of crude oil in all scenarios, of which is marginally cheap to supply natural gas to the
European Union using the baseline scenario as compared to both the risk and CO2 reduction
scenarios.
On the other hand, CO2 reduction supply scenario favors energy supply to the European Union
based on the fact that the average marginal cost of supply is lower compared to the Baseline and
Risk reduction scenarios.
66. 55
5 Conclusions
The aim of this study was to develop and apply the best supply scenarios for energy supply from
Nigeria to Europe, with the hope opening up more markets for the Nigerian oil and gas sector of
the economy, as well as allowing for more competition the European gas market, which is
largely dependent on Russia.
In the analysis of the subject matter, three supply scenarios were put into consideration in the
modeling approach to this problem, which are:
1) A baseline scenario: whereby current policies, socio-economic and technological trends
were used to forecast future trends in supply.
2) A CO2 reduction by 15% scenario: whereby CO2 emission constraints were placed on the
baseline scenario, and modeled to envision the future supply outlook from Nigeria
3) A risk reduction by 15% scenario: whereby CO2 emission constraints were substituted for
by risk reduction in the baseline scenario, and modeled again to see the future supply
outlook.
Based on the comparatively analysis of all three supply scenarios, the most objective scenario to
implement will be that of the Baseline scenario because not only is it environmentally friendly
given analysis of the results in Chapter four (4.7), it allows Nigeria’s energy supply longevity in
the market. Particularly with respect to natural gas, as Nigeria’s crude oil supply sit set to
dwindle within the next thirty to forty years as against gas.
More so considering the average marginal cost of energy supply the Europe as contained in
Chapter four (4.8), it is considerably cheaper to supply additional amounts of energy to the
European Union treading along this line as compared to the Risk and CO2 reduction scenarios .
67. 56
However in term of risk, the best implementation scenario would be that of the Risk reduction
scenario, but this model option comes with added overall total system cost and less energy being
delivered to the European Union with respect to the Nigerian supply corridor.
Conclusively the best the operational model scenario that benefits the Nigerian Economic
outlook with respect to emerging economic markets would be the Baseline scenario; based on the
analysis of this case study which incorporates operational reality and overall fiscal regimes based
on present trends.
68. 57
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