Nigeria Focuses on Gas to Drive Future and Lift Economy

Nigeria has set the ambitious goal of remaking its natural gas industry in the coming decade, hoping to use its abundant gas resources to power its fast-growing economy as well as benefitting from a growing export business. To succeed, it will require foreign capital, hospitable policies and government-industry cooperation.

"Our major objective for the gas sector is transforming Nigeria into an industrialized nation whose gas plays a major role through an enhanced, accelerated gas revolution," said H.E. Muhammadu Buhari GCFR, President of the Federal Republic of Nigeria. "The federal government is beginning to be more proactive to push toward gas development. Gas has enormous potential to diversify and lift the Nigerian economy."

The president's comments came during a special conference in advance of the 2021 Nigeria International Petroleum Summit (NIPS), which is scheduled for June. The March 29 conference took as its theme, "Toward a Gas-powered Economy by 2030." President Buhari had already declared Jan. 1, 2021, to Dec. 31, 2030, as the "Decade of Gas Development for Nigeria."

Energy sector leaders and senior executives across the oil and gas industry converged on Abuja, Nigeria, for the hybrid conference and networking sessions. Conference attendees discussed how cultivating natural gas for the internal market could stimulate economic growth, improve Nigeria's energy mix, drive foreign investment and create jobs.

"Natural gas is regarded as the fuel of choice to enable successful transitions in emerging market economies," said H.E. Joseph McMonigle, Secretary General of the International Energy Forum, in his opening remarks. "The IEF is committed to supporting our members' efforts to use readily available gas resources and to build new infrastructure."

Conference speakers noted that while remarkable progress has been made in building out Nigeria's natural gas export industry, there is much to do to promote the domestic market. Nigeria ranks ninth globally in proven gas reserves, with 203 trillion cubic feet (tcf)—enough to serve both domestic and export markets.

"Nigeria's Decade of Gas Initiative shines a beacon of light on the importance of gas," said H.E. Mohammad Sanusi Barkindo, Secretary General of the Organization of the Petroleum Exporting Countries (OPEC). "Gas is vital to Nigeria's future, as is oil. Both are the fuels globally for the foreseeable future and will be instrumental in the energy transition."

H.E. Dr. Yury P. Sentyurin, Secretary General of the Gas Exporting Countries Forum (GECF), noted that gas will be a core source of energy development and a factor in climate change initiatives. "Natural gas will displace other energy sources and other sectors and will be indispensable in the long run to the [energy] transition," he said.

Reaching its ambitious goals may be difficult as there are numerous hurdles in Nigeria's way, including inadequate gas infrastructure, both in terms of pipelines and power generation; shortfalls in funding, which make it difficult to build out production; outstanding debts that unsettle investors; and uncompetitive domestic pricing. Speakers highlighted the need to develop a more conducive and reliable business environment; and to complete the National Integrated Power Project (NIPP) transmission lines.

"The potential is clearly there," said Michael Sangster, Managing Director and Chief Executive of Total E&P Nigeria and Chairman of the Oil Producers Trade Section (OPTS). "We will need to find a way to get the infrastructure in place. There is a need for infrastructure investment. We need to generate the demand and … address upstream funding of joint ventures."

Nigeria's domestic natural gas consumption in 2019 was about 15 billion cubic metres (bcm), and it is expected to rise to some 20 bcm by 2030. Nigeria's net exports of natural gas are 33 bcm, and they are expected to increase to 44 bcm by 2030. LNG accounts for the majority of exports and this is expected to rise from 32 bcm in 2019 to 41 bcm by 2030. Pipeline gas exports were 0.8 bcm in 2019, and likely will rise to 3.5 bcm by 2030.

H.E. Timipre Sylva, Minister of State for Petroleum Resources, said that in spite of the pandemic, Nigeria continued to invest in infrastructure development in 2020, closing some USD $10 billion in expansion projects. Nigeria has recently invested in the Nigeria LNG Train 7 Project, the National Gas Expansion Programme, Autogas policy and the construction of the 614-km Ajaokuta-Kaduna-Kano (AKK) gas pipeline.

"We are creating a roadmap for the federal government of Nigeria and for its vast resources to put it in the league of top industrialized nations," said Mr Sylva. "We did not allow the COVID-19 pandemic to deter us."

For some key players, there is a spirit of optimism for what comes next. "We are undersupplied in the domestic market, particularly power," said Tony Attah, Managing Director and Chief Executive Officer of Nigeria LNG Limited. "This the challenge we have today. We need to make sure that gas, which is an easy source of energy, has the capability to transform our economy."