Russia Nigeria Oil
Russian President Vladimir Putin meets Nigerian President Muhammadu Buhari on the Russia-Africa summit, October 2019. Photo:

As oil market crashes, Russia and Nigeria are bound to rethink energy partnership

In October 2019, Russia held the first Africa-Russia summit. Dozens of African leaders attended in the hope to energise and reform the partnership dating back to the 1960s. The agenda of the summit seemed broad and ambitious. However, in practice, the talks narrowed down to quite conventional topics: weapons, mining and fossil fuels. 

During the summit, Russian energy minister Alexander Novak vowed to “widen and deepen” the cooperation with Nigerian fossil fuels producers. At the time two Russian companies, Lukoil and Gazprom, showed a clear appetite for Nigerian oil and gas. 

They are not alone. In recent years, such oil giants as Shell, Exxon, Total, and Eni secured fresh deals with Nigeria’s National Petroleum Corporation, competing for the country’s rich natural resources. Nigerian government, on its part, has shown little opposition to these carbon intensive activities while acknowledging the acute dependency on oil revenues.    

Such pledges directly contradict the last assessment of the International Energy Agency (IEA). In a recent report, the body calls for an immediate ban on all new oil and natural gas projects. Otherwise, the goal of limiting the global temperature rise to 1.5 °C will become unachievable. 

Instead, experts suggest investing in renewable energy infrastructure across the region. Despite having some bottlenecks, this market offers rich opportunities in Africa to those who are brave enough to enter it first, they said.   

“We can start looking at investment in wind power, solar energy, creating more jobs in sectors we want to see in future, agriculture and key items or strategies to focus on in passing the oil and gas industry,” said Olumide Idowu, climate activist and co-founder International Climate Change Initiative (ICCDI).

Testing the waters

Instead of transitioning to renewables, Russian oil companies have been trying to exploit Nigeria’s natural resources for the last decade.

Lukoil, for example, entered the deep-water project at the OML-140 oil extraction facility offshore Nigeria in September 2014. A block with an area the size of Rome (1.2 thousand is located 135 km from the coast. 

The Russian oil giant owns 18% of this project, which is operated by the American company Chevron. The deal was largely regarded as a cautious attempt to test the waters on African territory.

Russia Nigeria Oil
A Nigerian worker at an offshore oil production facility. Photo: Windfall En Projects Ltd.

The Russia-Africa summit proved these assumptions. On October 24, 2019, Lukoil’s president Vagit Alekperov and Managing Director of Nigerian National Petroleum Corporation (NNPC) Mele Kolo Kyari signed a memorandum of understanding to increase fossil fuel projects. 

According to this document, both parties are to consider cooperation in the exploration and extraction of hydrocarbons in Nigeria. In addition, Lukoil pledged to estimate possible technical assistance to its Nigerian counterpart.

On its part, Gazprom’s plans of a joint venture with NNPC were focused on developing gas infrastructure. Established in 2009, the enterprise yielded little results. In spite of this, Energy minister Novak still said in 2019 that this partnership should be revived. 

Reliance on fossil fuels

A year and a half after that meeting in Sochi, everything is different. Oil prices plunged following the pandemic and lockdown that caused a general decline in global economic activities. Fossil fuels companies started begging to sell off their oil, because, without commensurate demand, excess crude lacked adequate storages. 

Nigeria’s oil sector was hit hard, thus causing a deep dive in its economy which led to a recession — first time since 2016. This was as a result of the country’s heavy dependence on the sale of crude for foreign exchange — oil revenue. 

The nation cut down on its federal budget from 10.6 trillion Naira ($25.7bn) to 10. 5 trillion Naira ($25.5bn),  the amount of oil produced was reduced from  2.18 million barrels per day to about 1.70 million barrels per day. Oil prices also reduced from the benchmark of $57 per barrel to $15 per barrel

“For us in Nigeria, the oil prices plunge had a devastating effect on the economy: the government revenue and expenditure forecasts had to be revised downwards and we also picked up a bit more debt just to keep the ship of state afloat”, recalls Joe Nwakwue, an oil and gas consultant partner with Zera Advisory and Consulting. 

“This state of affairs where we depend solely on one commodity for revenue and spend is not sustainable in both the short and long term. We must urgently devise and implement a workable revenue diversification plan”, he adds. 

Oil revenues: a curse or a blessing?

Experts agree that the 2020 oil collapse highlighted the need for Nigeria to diversify its energy sources. However, they suggest different solutions

Idowu, of the International Climate Change Initiative, argues that, with sustainability at the front burner in the global landscape, deepening a partnership in the oil and gas sector is a misplaced priority, he said. 

“If you want to help a country [to invest], why can’t you look at the country’s agenda and plan towards sustainability? If you are building a partnership to strengthen the oil sector in a country and everybody all over the world is talking about moving from fossil fuel to renewable energy, are you doing such country harm or you are trying to leverage on our incapable leaders?”, said the activist. 

He advises that instead of “waiting for Russian oil investments” —which would not enable it to achieve its climate goals— Nigeria should rethink what would be its “transition strategy” towards a greener future. 

Meanwhile, Nwakwue, is of the view that Nigeria and Russia could have investments coming into the oil and gas sector without compromising on its climate goals. He believes that investments are needed for the country to develop its economy.

“This is like asking a hungry man if he should insist on a balanced diet or nothing. We do not have such luxury. We need energy investments to achieve our development and poverty reduction goals”, says the consultant. 

He adds that Nigeria’s energy balance “will undoubtedly become greener and cleaner with time” but the country still needs oil revenues to ensure economic growth, which, for its part, will pay for the green transition. 

“My former boss used to say that oil got us into this mess and oil will get us out of it. I would agree with him to the extent that we do the right things going forward”, Nwakwue claims. 

Russia Nigeria Oil
Construction of solar panel array structure in Africa. Photo: Jon Strand.

Rethinking strategies 

The shrinking global oil demand in combination with the accelerated transition towards cleaner energy systems forced many fossil fuel producers to rethink their investment strategies.

According to the lead analyst of Russian National Energy Security Fund, Igor Yuskov, Russian oil and gas companies had to review their plans on new investment abroad after the collapse of oil prices in 2020. 

Additionally, the agreement between OPEC+ countries (which includes Russia and Nigeria) has put a cap on oil extraction and forced producers to tighten their belts.  

“The Russia-Africa summit was largely a political event, and Moscow needed something to entice African leaders. And they promised investments. However, in reality, extracting hydrocarbons in Africa is very risky, and in the current situation companies have to think twice”, says Yushkov. 

To adapt to the new market, Russian fossil fuel producers began to include renewables in their development strategies, researching wind and power technologies both for their own use and for export, says Senior Researcher at the Institute for African Studies of the Russian Academy of Sciences, Olga Kulkova.

“Interestingly, Russian companies invest more in renewable energy sources abroad. In particular, Lukoil’s green capacities in Europe are almost 10 times higher than in Russia”, Olga Kulkova points out. 

A promising land 

Africa has a big potential for green energy production, says Nataliya Zaiser, Chair of the Board at Africa Business Initiative and Vaidai Club expert. The continent enjoys vast solar and wind resources, she adds 

“Russia, naturally, is not the number one country in the green technologies market. But it has taken the course on their development and already has some results, such as Rosatom’s wind-powered generators. So, if we want to enter this market, why not do it together with our long-term partners and friends?” she adds.  

But there is a catch. Poorly-developed electric grid and security concerns are holding international investors back. 

As Zaizer explains, extracting solar or wind energy in African countries is no problem, but delivering it to the customer might be. Currently there is no continent-wide power grid, for example, and conflicts and armed groups endanger the stability of supply. 

However, experts agree that Russian companies can start by contributing to create the regional electric grid Africa lacks so desperately. They could do this, for example, by acting as contractors in building energy infrastructure, said Igor Yushkov. This would not only generate profits and unlock further investment but also benefit the country’s reputation abroad. 

Olga Kulkova suggests that Nigeria has the potential of becoming a “testing ground” for Russian companies hoping to enter the green energy market. 

“It would be very useful to gain experience in implementing projects in such a large market as the Nigerian one, with the prospect of applying and adapting best practices for expanding to other African countries”, she says. 

During the climate summit organised by American president Joe Biden, both Nigerian and Russian presidents reaffirmed their commitment to the Paris Agreement and their willingness to cooperate with other world leaders to combat the climate crisis.

Although their partnership in the field of green energy is yet to begin, experts from both countries agree that it will benefit all sides. 

slot thailand slot88 joker123 zeus slot slot mania habanero idn slot jdb slot slot gacor maxwin slot thailand slot thailand slot thailand slot thailand sv388 slot kamboja idn slot slot ovo habanero slot petir slot dana slot maxwin slot ovo starlight princess live casino slot zeus pg soft slot olympus ibcbet maxwin slot thailand slot pgsoft slot slot mahjong zeus slot digmaan slot mania slot pulsa jdb slot slot777 slot shopee slot spade gaming slot thailand slot thailand fafaslot nolimit city slot princess fafaslot fafa slot slot princess slot gacor slot thailand slot mahjong slot gopay slot88 slot toto slot server thailand slot thailand slot77 slot gacor slot thailand slot server thailand slot thailand akun gacor slot maxwin slot gacor slot thailand slot kakek zeus Pg Soft Maxbet Ibcbet Starlight Princess Slot Ovo Joker123 Mahjong Ways 2 Sv388 Sbobet Slot Dana Slot Thailand Slot Thailand Digmaan Sv388 Joker123 Mahjong Ways 2 Slot Dana Slot Gacor Slot Anti Rungkat baccarat roulette sicbo casino online sv388 tembak ikan online sbobet slot macau slot thailand slot thailand slot88 situs slot wwg slot wm casino tembak ikan slot thailand slot wala meron slot nolimit city slot pg slot gacor slot88 slot50000 slot mahjong slot thailand 66k bet slot daftar judi slot online indonesia slot mahjong ways slot thailand mahjong ways slot gacor slot mawin slot gacor slot gacor slot gacor slot thailand slot thailand slot gacor slot ovo slot gacor slot gopay slot gacor slot gacor slot thailand slot gacor judi slot slot thailand slot thailand slot thailand slot mahjong ways 2 slot pragmatic slot demo pragmatic slot demo pg soft demo slot pragmatic slot gacor 4d slot pg soft pgslot pgsoft pgsoft sv388 slot88 pgsoft slot thailand slot88 slot thailand slot gacor slot ovo slot dana fafaslot slot ovo slot jepang judi slot gacor slot rusia Situs Daftar Judi Slot Mahjong Ways 1 dan 2 PG Soft Online PG Soft : Daftar Situs Judi Slot Online Gacor Slot Kakek Zeus RTP Slot > Daftar Situs Judi Slot Gacor Mahjong Ways 2 PG Soft : Daftar Situs Judi Slot Online Gacor Terbaik Situs Slot Online Gacor Dan Agen Slot Pragmatic Play Terpercaya Slot Gacor: Situs Slot Online Pragmatic Play & Bocoran Pola Slot Situs Slot Online Terbaik Terpercaya dan Terbesar di Indonesia Slot Kakek Zeus Daftar Link Slot Olympus Terbaru Slot Dana Daftar Judi Slot Online Indonesia Paling Gacor di Indonesia Sabung Ayam Online Sv388 Daftar Situs Judi Slot Online SLOT88 SLOT PG SOFT GACOR Bandar Slot Daftar Situs Judi Online Terbaik & Terpercaya Gacor power gaming sv388 lucky neko slot gacor slot gacor slot88 slot kakek slot pg slot kakek zeus slot dana slot maxwin slot server luar negeri slot thailand Link Daftar Situs Judi Slot Deposit Dana 20RB Tanpa Potongan Power Gaming : Situs Slot Gacor Online RTP Pragmatic Play Power Gaming : Situs Slot Gacor Online RTP Pragmatic Play Power Gaming : Situs Slot Gacor Online RTP Pragmatic Play Link Daftar Situs Judi Slot Deposit Dana 20RB Tanpa Potongan Slot Pragmatic - Link Alternatif Judi Slot Online Gacor Kakek Zeus Power Gaming : Situs Slot Gacor Online RTP Pragmatic Play Daftar Slot Dana Power Gaming : Situs Slot Gacor Online RTP Pragmatic Play lucky Neko Daftar & Login Slot PG Judi Slot 88 Online Power Gaming : Situs Slot Gacor Online RTP Pragmatic Play Power Gaming : Situs Slot Gacor Online RTP Pragmatic Play Power Gaming : Situs Slot Gacor Online RTP Pragmatic Play Power Gaming : Situs Slot Gacor Online RTP Pragmatic Play Power Gaming : Situs Slot Gacor Online RTP Pragmatic Play Power Gaming : Situs Slot Gacor Online RTP Pragmatic Play Power Gaming : Situs Slot Gacor Online RTP Pragmatic Play Power Gaming : Situs Slot Gacor Online RTP Pragmatic Play Power Gaming : Situs Slot Gacor Online RTP Pragmatic Play Power Gaming : Situs Slot Gacor Online RTP Pragmatic Play Slot Mahjong Ways 2 Mudah Jackpot Paus di PG Soft Hari ini 2023 Lucky Neko Situs Slot Gacor Pgsoft Hari Ini Slot Pragmatic - Link Alternatif Judi Slot Online Gacor Kakek Zeus SITUS SABUNG AYAM SV388 ONLINE DAFTAR LINK LOGIN APK AGEN SV388 Daftar Judi Slot Online Indonesia Paling Gacor di Indonesia SBOBET Login Agen Judi Bola Sbobet Mahjong Ways | Slot PG | Slot Mahjong Ways 2 | Slot PGsoft | Daftar Slot Mahjong Situs Joker123 | Joker123 | Joker Gaming | Daftar Slot Joker Power Gaming : Situs Slot Gacor Online RTP Pragmatic Play Agen Daftar Situs Judi Slot Online Terpercaya Slot Kakek Zeus : Daftar RTP Judi Slot Online Gacor Gampang Menang Joker123 Game Slot Gacor Joker Gaming Casino Online Indonesia Power Gaming : Situs Slot Gacor Online RTP Pragmatic Play