The global shift towards decarbonisation has increased the importance of gas in the global energy mix, as it is the cleanest-burning hydrocarbon and complements renewable energy sources like solar, wind and hydropower. However, the unprecedented surge in gas prices, supply tensions caused by the substantial cuts in Russian gas supply (via pipelines) and disruptions in major gas-producing countries resulted in declines in global gas demand and supply in 2022. These challenges are eroding the gas industry’s reputation as a reliable and affordable energy solution, creating uncertainty regarding its future, particularly in developing nations where gas is expected to play a more significant role in meeting growing energy demand and achieving transition objectives. In spite of these obstacles, the global gas market is projected to grow at an average annual rate of 1.3% from 2023 to 2025, surpassing 4.2 trillion cubic meters. This growth will be driven by policy changes favouring gas over coal and liquid fuels, industrialisation, population growth and extreme weather events, all of which will stimulate the demand for gas.
In Nigeria, gas consumption declined by an estimated 3% to 14 billion cubic meters (bcm) in 2022. This decrease was mainly due to supply chain disruptions caused by persistent pipeline vandalism and force majeure declared by gas producers due to severe flooding, which led to gas supply shortages and exerted upward pressure on prices. In addition, Nigeria heavily relies on imports to meet over 50% of its domestic LPG consumption; thus, the foreign exchange scarcity related adversities experienced by industry operators further contributed to the rise in LPG prices, thereby dampening domestic consumption. In spite of this, the Nigerian gas industry (“the Industry”) is poised for long-term expansion, with gas demand expected to rise by an average annual rate of 5%, reaching 16 billion cubic meters (bcm) by 2025. This increase will be driven mainly by rising investments in gas-based industries, government-led reforms promoting cleaner and sustainable energy sources, the nation’s burgeoning population and a high rate of urbanisation, which will facilitate gas demand in the power, industrial and transportation sectors. Furthermore, the recent implementation of the new Petroleum Industry Act (PIA) has brought about significant restructuring within Nigeria’s oil and gas industry by establishing a new legal, regulatory and fiscal framework, which is expected to attract investments in midstream gas infrastructure and increase gas supply to strategic sectors.
This report provides a detailed analysis of the Nigerian gas industry, focusing on liquefied natural gas (LNG) and liquefied petroleum gas (LPG). It includes:
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