Oil and gas infrastructure plays a pivotal role in the economic development of many developing countries, including Nigeria. The sector has historically driven growth by generating substantial revenue, facilitating employment, and fueling industrial activities. However, the global shift toward cleaner and more sustainable energy sources has raised new challenges and opportunities for infrastructure management within the oil and gas sector. In this context, stakeholders in developing countries have a significant role in ensuring a smooth and efficient transition to green energy.
The State of Oil and Gas Infrastructure in Developing Countries
The oil and gas sector in developing nations often faces infrastructural challenges, including aging facilities, limited technological advancement, and regulatory inefficiencies. These issues hamper productivity, increase operational risks, and often contribute to environmental degradation, especially in regions where compliance with international environmental standards is lacking.
Major oil and gas companies in Nigeria’s, with the backing of their shareholders, are expected to competitively reduce greenhouse gas emission intensity (GEI) from their operations. This would support the Nigerian government’s Energy Transition aspirations through phased decarbonization projects. By safely utilizing and/or storing captured CO2 in collaboration with other stakeholders, they can protect value by producing low-carbon hydrocarbon products, while optimizing production availability and preserving land mass and community ecosystems. This can only be achieved with support and cooperation from the government through the relevant regulatory agencies
According to the International Energy Agency (IEA), oil and gas infrastructure in developing countries must reduce its carbon footprint by at least 30% by 2030 to align with global climate goals. This statistic highlights the urgent need for proactive measures and strategic partnerships across multiple sectors to drive infrastructural improvements.
The Role of Stakeholders in the Green Transition
Transitioning to green energy in developing countries is a complex, multi-dimensional process that requires the involvement of various stakeholders, including governments, regulatory bodies, private companies, international organizations, and local communities. Each stakeholder has a critical role in ensuring the success of this transition.
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- Government and Regulatory Bodies: Governments must create an enabling environment through policies that incentivize green energy investments, such as tax breaks, subsidies, and grants for renewable energy projects. Regulatory frameworks should be updated to ensure compliance with global environmental standards and reduce emissions.
For instance, the Nigerian government’s National Gas Expansion Programme is a step in the right direction, focusing on the development of domestic gas utilization infrastructure. However, more robust policies promoting renewable energy are needed to complement such initiatives.
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- Private Sector and Oil and Gas Companies: Oil and gas companies, especially those involved in infrastructure management, must spearhead the green transition by investing in cleaner technologies, such as carbon capture and storage (CCS), renewable energy integration, and energy-efficient operations. Private sector investments are critical in upgrading outdated infrastructure and ensuring a lower environmental impact.
At Nigeria LNG Limited, the approach focuses on streamlining operations, enhancing efficiency, and implementing strategic operational policies that align with global environmental standards. Over the past decades, we are seeing reduction in operational carbon emissions through innovative energy solutions, such as running shuttle system operational activities rather than individualized vehicles, partly using electric cars for utility vehicles, adoption of solar power supply for some non plant use (in pilot phase) . LNG, being the cleanest fossil fuel, has a lower carbon footprint, and our infrastructure upgrades have enabled us to meet both productivity and environmental goals.
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- International Organizations and Financial Institutions: Global financial institutions and international organizations play an essential role in providing funding, technical expertise, and capacity-building initiatives to support the green energy transition in developing countries. Collaboration with bodies like the World Bank and African Development Bank ensures access to resources needed for sustainable energy projects.
- Local Communities and Civil Society: The participation of local communities is vital for the success of the green transition. These stakeholders must be engaged in discussions about energy infrastructure development, particularly regarding the environmental impact of oil and gas activities. Civil society can advocate for stricter environmental protections and ensure that companies remain accountable for their environmental obligations.
Strategic Approaches to Oil and Gas Infrastructure Management
In my over two decades of experience in the oil and gas sector, I have observed that successful infrastructure management requires a holistic approach that considers both operational efficiency and environmental sustainability. This means implementing policies and protocols that not only enhance productivity but also reduce operational costs and emissions.
At Nigeria LNG Limited, our strategy has been to align infrastructure management with global best practices in operational excellence, compliance, and safety. By fostering cross-functional collaboration across departments, we’ve developed and executed operational policies that reduce downtime, streamline maintenance processes, and improve energy efficiency.
For example, integrating digital solutions like predictive maintenance and real-time monitoring has significantly reduced unplanned operational shutdowns, saving millions in potential losses. These technological advancements also contribute to our sustainability goals by reducing emissions and optimizing resource usage.
Oil and Gas Transition to Green Energy: A Statistical Overview
According to the IEA, the oil and gas sector globally needs to cut its carbon emissions by 40% by 2040 to help meet the goals set by the Paris Agreement. Additionally, a McKinsey report estimates that global energy demand will grow by 2% annually, with renewables expected to account for over 50% of energy consumption by 2050.
In Africa, investments in renewable energy increased by 28% between 2019 and 2023, indicating a growing recognition of the importance of transitioning to green energy. Despite this, the continent still relies heavily on fossil fuels, with over 80% of its energy coming from oil, gas, and coal. Bridging this gap requires concerted efforts from all stakeholders involved.
Conclusion
The transition from traditional oil and gas infrastructure to green energy is a critical undertaking for developing countries. While the path forward is complex, involving technological, regulatory, and financial challenges, the role of stakeholders cannot be overstated. By fostering collaboration and investing in cleaner technologies, developing nations can position themselves for sustainable growth in the energy sector while contributing to global efforts to mitigate climate change.
As the Head of Operation Support and Coordination at Nigeria LNG Limited, I firmly believe that operational excellence, compliance, and innovation are key to this transition. My experience in streamlining operations across the LNG value chain has demonstrated the significant impact that strategic infrastructure management can have on reducing costs, improving efficiency, and minimizing environmental impact.
The future of the oil and gas sector in developing countries lies in its ability to adapt to the global push for greener energy, and stakeholders must lead the charge in this green transition.
Adedayo Afolabi
Head of Operation Support and Coordination, Nigeria LNG Limited, Bonny Island, Rivers, Nigeria.Stanford University Graduate School of Business, Design Thinking Certification
