Nigeria's energy consumption

Official Name: Federal Republic of Nigeria.

Summary: Nigeria is an energy-rich nation with both fossil and renewable fuels. In conventional energy reserves, especially oil, Nigeria is among the richest on the African continent. However, the nation is facing an energy crisis despite abundant resources.

Coal

Nigeria has a long history of resource extraction, with the energy sector developing particularly in the twentieth century. Coal was first discovered in 1909, near Udi in the central-eastern portion of the country, but major exploration did not begin until 1916. By the early 2020s, proven coal reserves amount to about 379 million tons and inferred reserves to about 2.8 billion tons.

As of the 2020s, the Nigerian coal industry has several notable mines, including the underground mines of Okpara and Onyeama in the state of Enugu, the Aba surface mine in the state of Kogi, and the Owukpa underground mine in the state of Benue. In 1950, the Nigerian Coal Corporation (NCC) was formed and made responsible for the exploration, development, and mining of coal resources. Production rose to a peak of 905,000 tons in 1958–59, contributing more than 70 percent to commercial energy consumption in the country. The coal industry gave rise to the nation’s early enterprises and industries—the Marines, the Nigerian railways, Electricity Corporation of Nigeria (later the National Electric Power Authority, NEPA), and the Nigeria Cement Company—and supplied all energy requirements up to the late 1960s.

After 1959, coal production decreased significantly each year, and during the period of the Nigerian Civil War (1966–70) no coal production was reported, because all the mines in the country were abandoned. The NCC has established several joint ventures with outside entities to mine coal, but those efforts met with limited success. In 2021, coal was only about 0.09 percent of the country's total commercial energy consumption.

Other potentially significant coal resources in Nigeria are the Inyi deposit, south of the city of Enugu, with a potential of approximately 10 million tons; the Afikpo deposit, located southeast of Inyi; and the Lafia Obi deposit, located in the northeast, with an estimated 33 million tons of metallurgical coal resources.

As of the early 2020s, Nigeria’s proven coal reserves were estimated at 379 million tons, although the nation’s potential reserves could be as high as 2.8 billion tons. However, Nigeria joined with 190 other nations at the 2021 United Nations Climate Change Conference in pledging to phase out the use of coal power by 2030.

Oil

Nigeria is the largest oil producer in Africa, and was the fourteenth-largest producer of crude oil in the world according to 2023 estimates. In 2021, it had estimated oil reserves of 36.89 billion barrels barrels, tenth most in the world. The primary locations of these reserves are the Niger River Delta, offshore in the Bight of Benin, the Gulf of Guinea, and the Bight of Bonny.

According to the US Energy Information Administration (EIA), Nigeria’s oil production capacity peaked at around 2.44 million barrels per day in 2005, but attacks on oil infrastructure subsequently brought production down significantly. Political developments in 2009 allowed the restart of some shut-in onshore production, which, along with offshore oil developments, boosted crude production once again. In 2023, production of crude reached 1.514 million barrels per day. Several foreign companies were operating in joint ventures or production-sharing contracts (PSCs) with the Nigerian National Petroleum Corporation (NNPC).

Nigeria has four major refineries: Port Harcourt I and II, Warri, and Kaduna. As a result of poor maintenance, theft, and fire, none of these refineries has ever been fully operational. As a result, Nigeria imported most of its petroleum-derived products while exporteing most of its crude oil production. According to the International Energy Agency, Nigeria exported almost 92 percent of its crude oil in 2021 to destinations all over the world, including North America, Europe, Asia, South America, Central America, and Africa. Nigeria was overdependent on crude oil for its foreign exchange earnings; hence, the economy is vulnerable to the unstable nature of the international oil market.

Natural Gas

Nigeria was the largest natural gas reserve holder in Africa as of 2023. Prior to 1999, exploration for gas in Nigeria was limited, and much of the gas was flared. The US Central Intelligence Agency estimated that Nigeria had 5.761 trillion cubic meters of proven natural gas reserves 2021, substantially larger than its oil resources in energy terms. The majority of the natural gas reserves are located in the Niger Delta. In 2022, Nigeria consumed 20.719 billion cubic meters of natural gas, mostly for electricity generation; the remaining gas was either vented or flared. Numerous projects have sought to reduce the amount of flared gas, and succeeded in reducing the amount by 50 percent from 2004, despite the country's overall amount of flared gas remaining one of the highest in the world. As with the oil industry, the gas industry faces challenges from poor infrastructure, security threats, and corruption that frequently disrupt production.

A significant portion of Nigeria’s natural gas is processed into liquefied natural gas (LNG). In 2023, Nigeria exported approximately 17.5 billion cubic meters of LNG. Major trading partners included Japan, South Korea, Spain, and Mexico (the United States was a major importer of Nigerian gas until its own domestic production increased in the 2010s). Nigeria’s main natural gas project is the Nigeria Liquefied Natural Gas (NLNG) facility on Bonny Island. Some gas is carried by the 420-mile West African Gas Pipeline from Nigeria to Ghana via Togo and Benin. The pipeline's official capacity is 170 million cubic feet per day, though it typically operates at one-third that level. Both Nigeria and Algeria are trying to construct the Trans-Saharan Gas Pipeline (TSGP), which would carry natural gas from oil fields in Nigeria’s Delta region to Algeria’s Beni Saf export terminal on the Mediterranean.

Renewable Energy

Renewable energy resources other than hydropower and traditional biomass have not received much consideration in Nigeria, and it is anticipated that renewables will account for only a tiny contribution to the nation’s energy sector in coming decades. Apart from solar thermal and biogas technologies, no other renewable energy technology has been developed. According to the Energy Commission of Nigeria (ECN), utilization of renewable energy sources is minimal. The International Energy Agency estimated Nigeria received only 5.6 percent of its energy from renewable sources in 2020.

The total technically exploitable large-scale hydropower potential of the country is estimated to be greater than 10,000 megawatts, which would be capable of producing 36,000 gigawatt hours of electricity annually. However, only about 8,300 gigawatt-hours was produced by hydropower in 2023.

Nigeria lies within latitudes that receive a great deal of sunshine, and solar radiation is fairly well distributed. Apart from traditional open-air drying, however, this solar energy has not been exploited and solar technologies are not much used. The amount of solar potential in the country, according to 2005 estimates by the Energy Commission of Nigeria and the United Nations Development Programme, could yield about 5.5 kilowatt-hours per square meter per day, representing huge prospects for energy generation. The annual average of total solar radiation ranged from about 12.6 megajoules per square meter per day in the coastal latitudes to about 25.2 megajoules per square meter per day in the far north.

Nigeria has also been reported to have great potential for wind energy. For instance, in areas off the coasts of several states, including Lagos, Ondo, Delta, Rivers, Bayelsa, and Akwa Ibom, there is potential to harvest energy from the strong winds that pass over lagoons and oceans throughout the year. The annual mean speed of the wind, at a height of 10 meters above the ground, ranges between 2.3 and 3.4 meters per second at such sites, and between 3.0 and 3.9 meters per second in highland areas and semiarid regions; the monthly average wind power can be as high as 50.1 watts per square meter (a measure of wind-power density).

The energy sector accounts for less than 15 percent of the national gross domestic product (GDP) and Nigeria’s annual energy budget is relatively small, despite increased investment in electricity generation in the 2010s and early 2020s. Coupled with the relatively high per-unit cost of installed capacity of renewable energy technologies, these factors make it difficult to finance renewable energy publicly. A substantial expansion in quantity, quality, and access to energy infrastructure services will be essential to rapid and sustained economic growth, employment generation, and the overall well-being of the population in a country the majority of whose more than 236.7 million people are poor.

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