Key highlights
- The International Gas Union (IGU) said it supports Nigeria and other African countries to explore further natural gas production.
- It said Nigeria has the potential to export more gas.
- However, Nigeria and other African countries need to resolve some prevailing challenges before expanding their gas potential.
The International Gas Union (IGU) has said that Nigeria and other gas-rich African countries should adopt natural gas locally to close energy access gaps. It also said African countries can reap more rewards from more natural gas exports.
The organisation made this call in its March 2023 Global Voice of Gas report, which noted that Africa has recently been hit hard by high food inflation, energy, and supply chain costs. On the bright side, however, the IGU said Africa’s substantial natural gas reserves can be used not only to support its own economic prosperity and end energy poverty but also to provide the wider world with more reliable and cleaner energy.
On NLNG’s immense potential
In the report, the IGU said that the Nigeria Liquefied Natural Gas (NLNG) Limited has outstanding potential, and generated $9 billion in taxes and $18 billion in dividends to the Nigerian government in recent years. The report stated:
- “Besides exports, NLNG also supplies liquefied natural gas (LNG) to the domestic market, having signed 10-year contracts for the sale of 1.1 metric tons per annum (MTPA) of LNG to three local companies in June 2021. The project also produces high-quality natural gas liquids (NGLs) for the domestic market including liquefied petroleum gas (LPG), which replaces dirtier fuels for cooking in Nigerian households.”
The IGU also noted that Nigeria and other African countries need to adopt gas locally to promote industrialization, create jobs and expand supply chains with the production of fertilizers and petrochemicals, and develop energy-intensive industries such as cement, steel and desalination.
- “Gas can also provide baseload electricity in countries with no alternatives, ultimately supporting the integration of renewable energies. It can also provide households and industries with cleaner and more affordable energy and decarbonize the power mix in the short term by phasing out coal and diesel.
- “Gas systems can later be decarbonized with the use of renewable gas, hydrogen and carbon capture technologies. The report covers case studies where natural gas development has had clear benefits, both economic and environmental.”
Addressing challenges facing Nigeria’s gas sector
But for this to happen, the IGU says Nigeria and its counterparts must overcome these three current obstacles.
Financing: This has been stifled by growing national debts and global asset managers’ divestment from hydrocarbons. So, investments in gas must be future-proofed to demonstrate the fuel’s sustainability and climate value to global investors.
Lack of gas infrastructure: Africa can increase gas penetration by developing industrial clusters, reforming electricity markets, promoting regionalization and encouraging the adoption of small-scale technologies.
Policy uncertainty: Policymakers must create a better enabling environment and decrease the risks associated with investing in Africa. Policy certainty and physical security must be prioritized to provide a positive environment for growing gas value chains on the continent.
What you should keep in mind
Although there is a global push for carbon emissions reduction, Africa is energy-starved and needs to make use of all its resources to close energy access gaps. Exploring and producing more natural gas in the medium to long term, will help Nigeria and other African countries to industrialize, create jobs and provide energy access to millions currently living without energy.
