What is the solution to Nigeria’s gas problems?

Mar 25, 2022|Noelle Okwedy

The state of domestic gas supply in Nigeria can cause you to doubt whether we have the 9th largest global gas reserves. In fact, Nigeria accounts for nearly 3% of all known gas reserves in the world. 

 

 

Key Takeaways

  • Nigeria’s domestic gas supply hasn’t been optimal despite having 3% of global gas reserves and the 9th largest natural gas reserves worldwide.

  • The gas value chain suffers from poor payment and pricing issues in the downstream segment, which has reduced the incentives for upstream gas companies to prioritise supply.

  • The solution to the payment problem is guarantee-backed payment contracts while pricing in the domestic market has to be high enough to create incentives for suppliers to produce and low enough to protect consumers.

 

It’s like a person with a river in their backyard dying of thirst. But, having a river in your backyard doesn’t mean anything if you can’t walk to the river. As the saying goes, you can lead a camel to water, but you can’t force it to drink. In the same way, having gas reserves doesn’t mean anything if you can’t extract gas or use it. 

According to the BP 2021 Statistical Review of World Energy, Nigeria’s gas reserves were 5,750 billion cubic metres (bcm). However, our production was only 50 bcm. In comparison, Algeria, Africa’s top natural gas producer in Africa, produced 85 bcm in 2020 from reserves of 4,504 bcm.

Nigeria’s gas production has actually grown over the years. But we could be doing a lot better. Natural gas has become the global transitional fuel of choice as

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