Delta State’s energy sector has historically been dominated by hydrocarbons due to its position in the oil-rich Niger Delta. The Nigeria Extractive Industries Transparency Initiative, the country’s oil industry auditor, estimated that Nigeria earned $741.5bn from oil and gas between 1999 and 2020. In recent years the Delta State government has been working to diversify away from its reliance on oil and gas, as well as develop a renewable energy roadmap to support the green transition. Sustainable energy operations are expected to help boost energy security in the future.
Hydrocarbons
In 2021 Nigeria was Africa’s second-largest oil-producing country, with 36.9bn barrels of proven oil reserves. The Niger Delta region has an output of approximately 1.5m barrels per day (bpd). Since oil was first discovered in the region in 1956, oil and gas operations have been extensively developed, attracting high levels of foreign investment.
Warri, the economic centre of Delta State, is home to one of three government-owned oil refineries in the country, managed by the Warri Refining & Petrochemicals Company (WRPC). The plant was commissioned in 1978 and has a capacity of 125,000 bpd. The government supported the expansion of the refinery in 1988 to include a petrochemicals plant, and products manufactured in the facility include propane and butane, petrol, kerosene, automotive gas oil and fuel oil.
INVESTMENT:
In 2021 the Federal Executive Council approved $1.5bn to renovate the refineries in Warri, Delta State; and Kaduna State. The upgrades are expected to boost crude oil imports, and help meet local and regional demand. Desmond Inyamah, acting managing director of the WRPC, told local media in October 2022 that he expected full operations to begin at the Warri refinery by the end of 2023.
Challenges
The development of the oil and gas industry has resulted in wealth disparity in Nigeria, giving rise to oil theft. In March 2022 the Nigerian Upstream Petroleum Regulatory Commission estimated that from January 2021 to February 2022 more than $3.3bn was lost to crude oil theft, resulting in Nigeria struggling to meet its production quota set by the Organisation of the Petroleum Exporting Countries.
Additionally, the country’s ageing pipelines and infrastructure have led to oil spills, resulting in an estimated N711bn ($1.7bn) in lost revenue in 2021. Royal Dutch Shell, the Niger Delta oil industry’s main foreign investor, reported 1010 oil leaks for a total of 17.5m litres spilt between 2011 and 2022.
Renewable Energy
In August 2022 the state government adopted the Delta State Renewable Energy Policy Roadmap 2023-28, proposed by Nigerian start-up Clean Technology Hub and the Heinrich Böll Stiftung Foundation, a German NGO. Additionally, oil and gas operations were responsible for around 75% of the region’s greenhouse gas emissions.
The renewable energy roadmap explores the potential for solar, wind, hydro, geothermal heat and biomass. About 40% of Nigeria’s natural gas reserves are in Delta State, and the state is building a gas-based industrial park in the Ndokwa West Local Government Area. Delta State could also potentially benefit from its proximity to the OB3 gas pipeline, resulting in reduced gas infrastructure costs and ensuring the stability of power supplies, as well as contributing to environmental sustainability and price competitiveness.
Nigeria receives an average 6.5 hours of sunshine per day, so medium-sized commercial solar photovoltaic systems with a peak capacity of 100 KW could generate 130.6 MWh per year in Delta State. Biomass, or renewable energy generated from plants and animals, also has potential, with crops such as cassava, yams, maize and palm oil potentially acting as feedstocks for such initiatives. The recommendations outlined in the renewables roadmap support many of the wider aims outlined in the government’s Delta State Medium-Term Development Plan 2020-23, including opportunities for job creation and further economic diversification.
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