There is a familiar Nigerian proverb about living by the riverside while washing the hands with spittle. That proverb perhaps best captures the paradox of a country which despite proven natural gas reserves in excess of 200 trillion cubic feet continues to prioritise export over the domestic market.
This is nearly two decades of multiple policies aimed at making gas the foundation of her industrial economy.
The above is the grim summation by ‘Vanguard’ based on data from the Nigerian Upstream Petroleum Regulatory Commission NUPRC. The report is as telling as it is illuminating: 18 years of successive policies including the National Gas Policy Petroleum Industry Act PIA Domestic Gas Delivery Obligation DGDO Decade of Gas Initiative gas infrastructure projects and the proposed Gas Swap Framework Nigeria continues to live with that paradox.
Of course the paradox manifests in many ways. At a time domestic utilisation is said to have crossed the two billion cubic feet per day (bcf/d) mark Nigeria continues to rely on imported liquefied petroleum gas LPG for cooking. With more than 80% of the country’s grid electricity depending on gas-fired thermal plants the power sector – no thanks to shortage in dry gas – continues to suffer severe supply deficits blackouts.
And whereas the thermal power plants require about 1588 to 1630 million standard cubic feet of gas daily (MMscfd) only an estimated 40% (around 652 to 692 MMscfd) is actually available to get the system running. As for domestic industries majority still face localised bottlenecks and infrastructure gaps.
Yet the same country is known to have exported between 2022 and 2025 3.83 Tcf as against 2.69 Tcf she sold domestically -a difference of about 1.15 Tcf or 43 per cent more.
Equally noteworthy is that the country also exported 733.8 billion cubic feet (Bcf) in the first eight months of the current year compared with 516.8 Bcf sold domestically.
Far from being a call for trade-off what the situation demands is a greater realignment between the pressing need for forex with the need to guarantee domestic supply for industries commercial concerns and households.
Such alignment will obviously have great merit in the long run.
As the renowned consultancy firm PwC aptly puts the issue in perspective: harnessing the country’s proven gas reserves will generate $18.3 billion in gross value added annually while the optimisation of the domestic utilisation of gas will also yield an estimated 6.5 million jobs for the domestic economy.
To the extent that the current situation impacts negatively on virtually everything from electricity generation manufacturing to fertiliser production and other gas-dependent industries homes and even jobs there is even now more compelling urgency for the Federal Government to take on the issues more frontally.
As far as we can see the issues are quite straight-forward. The problems as indeed the solutions are already well documented. Among the issues are the lack of last-mile processing local distribution pipelines and storage facilities; the wide gap between lucrative dollar-denominated export prices and local naira pricing with consequence in dis-incentivising investment in domestic supply networks and the generally poor financial health and debt across the electricity value chain and their impacts on gas-to-power offtake.
So also is the high cost of building pipelines. None of these of course requires rocket science solutions. And the government to its credit has done a lot in this regard.
Among these are the landmark 614km $2.8 billion / $2.592 billion AKK natural gas pipeline project said to have reached approximately 95% completion. There is also the Obiafu-Obrikom-Oben (OB3) Gas Pipeline / ANOH Integration designed to boost domestic gas distribution. These are aside the Nigeria-Morocco Atlantic Gas Pipeline the $25 billion mega-project linking Nigerian gas reserves via West Africa toward Europe with construction slated to start around 2028.
Perhaps what is required now is for the government to take a closer look at the policies to see which area needs fine-tuning to ensure that they deliver on their expected outcomes.