Sopuruchi Onwuka (Editor)

The Nigerian National Petroleum Company (NNPC) Limited has stepped up efforts to drive the decarbonisation of Nigeria’s petroleum industry, identifying natural gas development, methane abatement, gas flare recovery and improved emissions measurement as critical pillars of its strategy to reduce the environmental footprint of oil and gas operations while safeguarding energy security and economic development.

The national oil company said its commitment to responsible energy operations is not driven solely by environmental considerations but also by the need to improve commercial profitability, strengthen operational efficiency and future-proof its business against the changing dynamics of the global energy industry.

NNPC’s strategy, which places natural gas at the centre of Nigeria’s energy transition ambitions, also emphasises the deployment of emissions measurement, reporting and verification (MRV) systems, improved operational processes and collaboration with regulators, international partners, financiers and technology providers to accelerate the industry’s transition towards lower-carbon operations.

The company outlined the operational priorities as Nigeria’s central message to the international community at the ongoing 31st Conference of Parties (COP31) of the United Nations Framework Convention on Climate Change (UNFCCC) in Antalya, Türkiye, where it called for a balanced approach to decarbonisation that recognises the peculiar development needs and energy security priorities of African countries.

Speaking during a panel session titled Decarbonising Africa’s Value Chain: The Role of National Energy Companies, Finance and Strategic Partnerships, Manager in charge of Sustainability Strategy, Standard and Policy at NNPC, Philemon Yilleng, said national oil companies must be allowed to pursue emissions reduction in ways that align with their statutory responsibilities to guarantee energy security, affordability, environmental stewardship and commercial sustainability.

Representing NNPC at the session, Yilleng cautioned against imposing expectations on national oil companies without adequately considering their development mandates and the economic realities of the countries they serve.

He explained that Nigeria’s Petroleum Industry Act (PIA) provides the framework within which NNPC must balance environmental responsibility with the commercial obligations of a national energy company.

Under the law, he said, the company was expected to deliver energy security and affordability, demonstrate environmental stewardship and remain commercially viable.

According to him, the challenge for NNPC is therefore to pursue decarbonisation without compromising the other critical objectives of the petroleum industry.

He said the company had identified practical opportunities for immediate emissions reduction, particularly through methane abatement, gas flare recovery and the optimisation of operational processes.

He explained that natural gas represents more than an interim solution in the global transition away from higher-emission fuels, describing it as both Nigeria’s transition fuel and destination fuel of the future.

“Now, we have been able to identify gas as our transition fuel. So, for us, gas is not just a transition fuel, but our destination fuel. So, we want to identify gas as a cleaner alternative for us,” Yilleng said.

He explained that the company’s decarbonisation strategy was designed to transform the way it conducts business by embedding emissions reduction into its operational culture and ensuring that petroleum activities leave the environment in a better condition.

According to him, NNPC is deliberately putting the necessary institutional foundations in place through strategies, policies and operational frameworks that will ensure long-term value creation and business resilience.

He disclosed that the company had developed its emissions measurement, reporting and verification system, alongside policies to guide the implementation of its sustainability commitments.

Yilleng stressed that decarbonisation must not remain a boardroom commitment but should be reflected in activities across the company’s operational structure.

To achieve this, he said NNPC was working with industry regulators, joint venture partners and financiers to integrate sustainability principles into its business decisions and field operations.

The collaboration, he noted, was intended to ensure that emissions reduction objectives were understood and implemented at every level of the organisation, rather than being treated as a corporate policy statement.

He, however, identified access to financing for natural gas development as one of the critical challenges confronting Nigeria’s transition strategy, arguing that the international community must recognise the role of gas in supporting developing economies.

Given Nigeria’s abundant gas resources, he said, increased investment in the sector would help bridge the country’s energy access and economic development gaps while strengthening energy security and addressing energy poverty.

Yilleng also called for stronger collaboration among industry stakeholders, stressing that the responsibility for delivering an environmentally responsible petroleum industry should not rest on NNPC alone.

For Stephanie Saunier, Managing Director of Carbon Limits, access to credible emissions data remains fundamental to the success of decarbonisation initiatives, particularly in attracting the financing required to implement emissions reduction projects.

She commended NNPC for the progress it had made in developing its MRV framework over the preceding 12 to 18 months, describing the company as one of the fastest-moving national oil companies her organisation had worked with on emissions measurement and reporting.

She explained that emissions MRV serves two important purposes including corporate reporting which enables companies to understand their carbon dioxide and methane emissions; and project-level measurement which establishes the actual reductions achieved through specific interventions.

She said credible reporting must be supported by physical measurements at operational sites, including the identification of emission sources through technologies such as infrared cameras.

According to her, the deployment of appropriate measurement technologies, supported by trained personnel, would strengthen the credibility of emissions inventories and provide the evidence required to demonstrate progress.

She urged NNPC to deepen its measurement activities across emission sources and operational sites, expressing confidence that the company was moving in the right direction.

Also speaking, Assistant Director and Head of Environment Management and Sustainability at the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Celina N. Evbuomwan, identified technological limitations, inadequate infrastructure and financing constraints as major obstacles to reducing emissions across Nigeria’s petroleum industry.

She said many operators were still grappling with the technical expertise and expensive technologies required to implement emissions reduction projects, while capacity development remained another significant challenge.

Evbuomwan particularly highlighted infrastructure deficits as a major constraint to recovering associated gas currently being flared and redirecting it towards electricity generation and industrial applications.

She explained that the limited and scattered nature of existing gas infrastructure had made it difficult to aggregate and commercialise recovered gas despite ongoing efforts by regulators to work with licensees, technology providers and financial institutions.

As part of efforts to address the challenge, she disclosed that the regulator had recently launched the National Gas Transportation Network Code, a framework that provides information on gas availability, existing infrastructure and applicable transportation tariffs.

The initiative, she said, was designed to improve access to gas transportation infrastructure and facilitate the recovery and utilisation of gas that would otherwise be flared.

She stressed that partnerships, collaboration and openness among stakeholders remained essential to overcoming the industry’s decarbonisation challenges, adding that regulators were working to provide the necessary policy environment to support the process.

For Paul Boeffard of the Environmental Defense Fund (EDF), the challenge of financing decarbonisation extends beyond the availability of investment capital to the development of appropriate financial structures through which funds can reach viable projects.

He said discussions with international investors and commercial banks had indicated considerable willingness to invest in Africa, particularly Nigeria, given the country’s energy requirements and investment opportunities.

However, he argued that NNPC must position itself to engage investors through financing instruments and institutional structures they understand.

Boeffard observed that the company’s evolution towards greater commercial independence, including the publication of financial statements and a stronger focus on operational excellence rather than government revenue collection, had improved its attractiveness to private capital.

He said investors increasingly viewed NNPC as a commercially oriented energy company and expected it to approach the capital market using established investment instruments.

Citing the successful bond issuances by indigenous energy companies, he referenced Seplat Energy’s $650 million bond and Dangote Refinery’s $750 million bond, both of which attracted strong investor demand.

He also pointed to Senegal’s national oil company, which had successfully issued a $700 million bond, as evidence that national energy companies could access international capital markets.

According to him, NNPC could pursue similar opportunities by strengthening its internal capacity to engage investors, developing appropriate financial and legal frameworks, and identifying bankable projects capable of attracting long-term financing.

He disclosed that the EDF had been working with NNPC to prepare the company for such financial engagements, adding that discussions with Standard Chartered Bank had recently reaffirmed the bank’s willingness to participate in a transaction of that nature.

Meanwhile, Partner and Head of Energy and Natural Resources for Africa at KPMG, Anish De, said national oil companies were strategically positioned to drive decarbonisation across Africa because of their institutional credibility, operational scale and capacity to develop critical infrastructure.

He noted that African countries faced the dual challenge of expanding energy access and reducing emissions, making national energy companies important instruments for achieving both objectives.

According to him, national oil companies had already demonstrated their capacity to drive developments in renewable energy, clean cooking and methane emissions reduction, leveraging their scale and institutional influence to accelerate projects that smaller players might struggle to implement.

He said their ability to create essential infrastructure was particularly important because decarbonisation projects often required extensive networks and investments that smaller private operators could not independently undertake.

De added that national oil companies possess the technical and operational delivery mechanisms required to translate government policies into functional infrastructure and commercially viable projects.

He also highlighted the importance of digital technologies in improving operational efficiency, monitoring emissions and strengthening investor confidence, noting that oil companies are well positioned to deploy such technologies because of their longstanding experience with digital applications in petroleum operations.

He urged African countries to adopt similar approaches, particularly by combining infrastructure development with emerging technologies to accelerate the implementation of decarbonisation projects.

Contributing to the discussion, Nicolas Lippolis of the Centre for Energy, Finance and Development (CEFD) argued that national oil companies should look beyond reducing emissions from their existing operations to consider how they could support the development of low-carbon industries.

He proposed a three-part framework based on identifying constraints, assessing the capabilities that energy companies could contribute and establishing the commercial rationale for investments.

He cautioned against assuming that national oil companies must automatically become direct investors in renewable energy projects, noting that their traditional business models were built around large-scale projects and revenues that might not align with the smaller sizes and lower profit margins associated with some renewable energy investments.

Instead, he identified direct project development, joint ventures and partnerships, acquisition of existing capabilities, venture investment in emerging technologies and market enablement through offtake arrangements or infrastructure aggregation as possible approaches through which national oil companies could participate in low-carbon sectors.

He said the companies could deploy their existing technical capabilities in areas like offshore wind, biofuels and biorefining. He added that they could also partner with other businesses where complementary expertise existed, or acquire established renewable energy businesses to accelerate diversification.

They could also provide venture capital for pilot projects or support emerging markets by acting as offtakers and aggregators where inadequate demand or infrastructure constituted the major obstacles to development, he suggested.

Lippolis stressed that commercial viability must remain central to investment decisions, arguing that the contribution of national oil companies to decarbonisation should be guided by clear business cases rather than an indiscriminate push into low-carbon sectors.

The panel also examined the growing role of technology in improving emissions detection and measurement, with discussions highlighting the importance of combining satellite surveillance, drones and ground-based sensors to identify emission sources with greater accuracy.

One of the contributors explained that advances in satellite technology had significantly improved the resolution of emissions monitoring, moving from broad geographical coverage of several kilometres to high-resolution observations capable of identifying emission hotspots within much smaller areas.

He noted that modern satellite systems could detect major emission sources, including super emitters releasing approximately 100 kilogrammes of emissions per hour, while drones and ground sensors could help pinpoint emissions at individual facilities and equipment-component levels.

He said integrating satellite observations with physical measurements and ground-based monitoring would provide a more comprehensive understanding of emissions inventories and enable operators to identify appropriate remedial actions.

He made it clear that no single technology could independently resolve the industry’s methane emissions challenges, making collaboration and the coordinated deployment of different monitoring systems essential.

The discussions at COP31 reflect the broader debate over how African petroleum-producing countries can reconcile climate commitments with the imperative of expanding energy access, attracting investment and sustaining economic development.

COP31, which is structured around implementation and acceleration of climate commitments, is operating under a shared leadership arrangement in which Türkiye’s Environment Minister, Murat Kurum, holds the presidency while Australia’s Climate Minister, Chris Bowen, oversees formal negotiations.

The conference agenda includes operational themes targeting methane reduction, zero waste and climate-resilient cities, alongside negotiations on climate finance, just transition and the pace of the global shift away from fossil fuels.

While developing countries are pressing wealthier nations to accelerate access to promised climate financing to support resilience, alternative energy development and economic growth, developed nations and climate advocates are pushing for stronger commitments to methane emissions reduction.

Oracle Intelligence reports that the position of NNPC points out the importance of pursuing a practical and commercially sustainable decarbonisation pathway in which natural gas development, methane abatement, gas flare recovery and credible emissions measurement reinforce one another.

The company’s approach places it at the centre of efforts to translate Nigeria’s climate commitments into operational changes across the petroleum value chain, while ensuring that the transition does not undermine the country’s energy security, affordability and development aspirations.