• Latest News

    Monday, July 8, 2024

    Nigeria’s LNG Exports Sees 13% Reduction Due to Gas Supply Constraints.

    The Nigerian Liquefied Natural Gas (LNG) export sector is experiencing substantial challenges due to feedstock shortages, resulting in a concerning 13 percent reduction in export volumes.

    The international Gas Union (IGU) published its 2024 World LNG Report, revealing a 13% decline in Nigeria’s LNG sales, from 15.1 million tonnes in 2022 to 13 million tonnes in 2023.

    This recent development has resulted in the West African nation dropping from sixth to eighth place in the global gas export rankings. Indonesia and Algeria surpassed the nation’s export volume, with Indonesia exporting 15.6 million tonnes and Algeria exporting 13 million tonnes of gas in the previous year.

    “Nigeria’s exports have declined by 1.55 metric tonnes due to ongoing force majeure, primarily caused by insufficient feedstock gas supply resulting from upstream disruptions,” IGU stated.

    The underlying cause of the issue can be attributed to the diminishing availability of natural gas reserves suitable for liquefaction. These feedstock shortages stem from multiple factors, such as the declining production of aging oil fields and disruptions in gas transportation due to pipeline vandalism.

    As per the International Gas Union (IGU), Nigerian LNG declared force majeure on certain cargo loadings in October 2022. This was primarily due to substantial flooding across its upstream gas supply production regions, necessitating the closure of several gas production wells.

    “While flooding conditions have been resolved, feedstock deliveries have still not recovered for pipeline vandalism.”

    The current situation poses significant challenges for Nigeria. The LNG industry has been a substantial source of revenue for the nation, and the diminishing market share results in a considerable loss of income. Furthermore, this decline may potentially lead to job displacement and impede economic growth.

    In the year 2023, the Nigeria LNG Limited (NLNG) disbursed a substantial dividend exceeding $40 billion. Of this amount, approximately 49% was allocated to the Federal Government of Nigeria, reflecting its shareholding interest in the company through the Nigerian National Petroleum Company (NNPC) Limited.

    Furthermore, the NLNG has disbursed approximately $32 billion to joint venture feedgas suppliers since its inception.

    “Fifty-five percent-60 percent of such payment goes to the Federal Government of Nigeria via its shareholding in NNPC Limited,” the company said.

    The recent suicide bombing incident in Borno highlights the urgent need for enhanced intelligence gathering and unwavering commitment from the military to effectively address security challenges in the region.

    “Some critical reasons associated with the decline in gas exports and production are insecurity and vandalism of gas infrastructure which often results in significant losses and disruption of production,” said Ayodele Oni, partner at Bloomfield LP.

    He added: “Also, due to the exit of some major International Oil Companies (IOCs), there has been a significant reduction in the level of investment in the gas sector.

    “Poor gas infrastructure is also a factor that has also contributed to the decline in gas production capacity. The emigration of some IOCs from onshore and shallow waters to deep offshore fields, leaving indigenous companies to take on significantly larger responsibility, has also been attributed as a factor for the decline in gas exports and production.”

    Nigeria’s ability to regain its footing in the LNG export market hinges on its success in tackling the challenges of vandalism, force majeure, and infrastructural deficit.

    The Nigerian government Is facing significant pressure to promptly address the critical issue of feedstock shortages. Potential solutions include augmenting investments in gas exploration and prioritizing infrastructure development to guarantee a consistent supply for LNG production.

    In March, Ekperipe Ekpo, Minister of State for Petroleum Resources (Gas), announced that significant efforts were being made to address the ongoing crisis affecting the supply of gas feedstock to liquefied natural gas (LNG) production and distribution companies.

    While reiterating our unwavering commitment to fortifying the nation’s gas supply, Ekpo provided assurances of a sustained augmentation in gas production and distribution.

    He emphasized the government’s proactive initiatives to tackle energy-related challenges and cater to the increasing demand..

    Amidst growing apprehensions regarding energy security, his affirmation underscores the government’s unwavering commitment to augmenting the accessibility and dependability of gas resources, catering to both domestic and industrial consumption.

    “I am impressed with what I have seen here today. We are moving towards zero emission and we need to do everything to supply gas to Nigerians,” Ekpo said.

    • Blogger Comments
    • Facebook Comments


    Item Reviewed: Nigeria’s LNG Exports Sees 13% Reduction Due to Gas Supply Constraints. Rating: 5 Reviewed By: BrandIconImage
    Scroll to Top