Gas demands up by 16.6% as Nigeria faces potential 3.1bcf/day shortfall

. Nation flares 2.5bn cubic feet of gas daily amid energy crisis
. Requires $20 billion yearly to bridge infrastructure deficit

Nigeria is poised to witness a surge in gas demand, with an estimated yearly growth rate of 16.6 per cent.

However, the country faces a significant challenge, as projections indicate a potential shortfall of 3.1 billion cubic feet per day (bcf/day) by 2030.

This looming deficit could severely impact Nigeria’s energy security and hinder its economic growth, particularly in key industries reliant on gas supply.

The Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, made the submission at the yearly strategic international conference 2024 of the Association of Energy Correspondents of Nigeria (NAEC) on the theme: ‘Gas as Energy Transition Fuel: Navigating Nigeria’s Trilemma of Finance, Energy Security, and International Politics.

Komolafe, who was represented by the Commission’s Director, Lagos Regional Office, Paul Osu, said between 2020 and 2030, the demand for gas is expected to grow at a compound yearly growth rate of 16.6 per cent p.a., noting that Nigeria may face, according to him, an impending gas supply crisis with a potential shortfall of 3.1 bcf/day by 2030” in the ‘Base Case Demand and Supply’ scenario.

He stressed however, that natural gas production is projected to increase from 8.0 bcfd in 2020 to 12.2 bcfd in 2030 driven by major projects like the NLNG Train 7 & Train 8, Nigeria/Morocco pipeline, Ajaokuta-Kaduna-Kano (AKK) Natural Gas Pipeline Project etc in the ‘high case supply’ scenario.

Komolafe said growth in gas demand currently outstrips supply, driven largely by growth in domestic demand which was enabled by an improvement in domestic supply obligation.

He emphasised that this will not meet the ‘high case demand’ scenario projected at 22.2 bcfd in 2030, noting that in just a decade, the demand landscape could change exponentially, especially if the power sector challenges are resolved.

“The purpose of this is to showcase opportunities in gas development in the Nigerian upstream sector and the need to complement hydrocarbon developments with renewable energy. As the upstream industry regulator, the NUPRC, through the instrumentality of the Petroleum Industry Act, 2021 (PIA), is at the forefront of the drive for interventions required to realize the Decade of Gas by enabling investment in cleaner hydrocarbon development through gas development as well as driving programmes such as Nigerian Gas Flare CommercialisationProgramme (NGFCP) for flare elimination and gas monetization to foster energy sufficiency, eliminate wastages while simultaneously attending to the urgency of reducing carbon emissions,” he said.

Komolafe stressed that the NUPRC is positioned to create a favourable operating environment, and urged the investors to leverage sustainability mandates in PIA (2021) as well as generous fiscal incentives.

He pointed out that the importance of the NGFCP is that more gas would be available for domestic utilisation as Liquefied Petroleum Gas (LPG), feedstock for power generation plants, fertiliser plants and petrochemicals as each of it would create an entry point for willing investors.

“The global imperative for energy transition is clear and justified, the need for Nigeria’s energy security, economic development and prosperity cannot be overemphasised. Thus, the agenda for Nigeria and other resource-rich developing economies is that the evolving energy dynamics must be calibrated against geography, history, and politics as well as the need for energy justice, equity, inclusivity, and sustainability.

“The new dynamics in the global energy arena necessitate that Nigeria, a country long dependent on the exploitation of oil and gas as the mainstay of its economy, re-examine its strategy to secure a blossoming energy future while meeting the global climate goals.

“The future we envisage for the petroleum industry should assure the utilization of Nigeria’s endowed natural hydrocarbon resources for shared prosperity, energy accessibility, affordability, sustainability, security as well as energy independence and energy sovereignty which are the cardinal pillars of the Nigeria Energy Transition Plan,” he said.

Also, the Chief Executive, Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, represented by the Authority’s Head of Public Affairs, George Ene-Ita, said despite the huge gas utilisation deficit, the nation still flares about 2.5 billion cubic feet of gas daily, noting that energy security is crucial for Nigeria’s economic growth.

He stressed that the wasted resources could generate enough electricity for the country’s energy and power needs.

Ahmed berated a situation whereby the number of LPG refilling plants in the country is less than 3,000, while CNG compression stations are less than 50 for a country of 200 million citizens.

Chairman of the conference and Group Managing Director, Rainoil Limited, Gabriel Ogbechie, said the country is blessed with abundant natural gas reserves but stands at a crossroads of opportunities and challenges.

He added that the decisions made today (yesterday) regarding the role of gas in the nation’s energy landscape will shape the country’s economic and environmental future.

He quoted the NEITI report as indicating that Nigeria requires approximately $20 billion yearly to bridge its gas infrastructure deficit from pipelines to processing plants.

According to him, with the recent removal of the petrol subsidy, there is a growing urgency to scale up gas alternatives, offering clean, affordable energy solutions for the nation, energy security, and building a resilient energy system.

He noted that the government aims to increase power generation through gas-fired plants, he said, to make this a reality, we need to invest heavily in gas infrastructure while tackling issues like pipeline vandalisation.