DRIVEN by higher market gains, Nigeria’s gas generation companies are currently prioritising European markets over domestic markets amid the United States-Iran conflict, which is disrupting global supply.
Moreover, pricing disparity between domestic and exported gas pushes gas companies to target European markets.
The ICIR reports that the closure of the Strait of Hormuz, occasioned by the Middle East crisis, is significantly disrupting global gas supply markets, with gas-producing nations gaining massively from the crisis.
For instance, the strait’s closure has cut off roughly 30 per cent of India’s natural gas supplies and 54 per cent of its Liquefied Petroleum Gas (LPG) imports, forcing the government to prioritise household supplies over commercial and industrial consumers.
Nigeria ranks among the world’s top 8–11 countries with the highest gas reserves, boasting over 210 trillion cubic feet (TCF) of proven gas, making it Africa’s largest reserve holder.
Informed sources said part of the reasons for the export market priority was poor fulfilment of gas off-take obligations by the Nigerian government in the power sector, with growing debt which has surged to over N6 trillion.
Nigeria’s Minister of Power, Adebayo Adelabu, had also confirmed that the gas generation companies (GENCOs) were no longer willing to sell gas to the power sector as a result of the growing debts.
He confirmed in his last press conference on the state of the power sector, noting that they had shifted their market focus to Europe as a result of the Middle-East crisis.
A power sector governance expert, Kunle Kola Olubiyo, told The ICIR that domestic gas supply is sold far less than what is sold at the International market, despite growing debt obligations on the part of the government.
“You know that these gas companies are purely commercialised and don’t sell at concessionary or charitable rates. They sell at $3.65 cents to gas thermal plants and gas trubined fired generation companies. This is still far less than the price the $8 they sell to small and medium-scale enterprises,” he said.
He stressed that the growing demands from the EU market, willing to pay to pay $12 per litre, is affecting local supply.
On gas price volatility, the European and Asian gas benchmarks have risen sharply, outpacing crude oil price increases, signalling a longer recovery for gas.
This has given more opportunities for the Nigerian market despite not having gas infrastructure compared to gas nations like Qatar and Kuwait.
Already, supply chain industries like automobiles, chemicals, and personal care products face gas supply shortages and manufacturing challenges as a result of this.
A former Chairman of the Major Oil Marketers Association of Nigeria (MOMAN), Adetunji Oyebanji, told The ICIR that the government needed to intensify efforts on improving gas infrastructure to maximise more gains on global gas demands.
“If we said we are doing a decade of gas, we ought to have done more investments in the gas and removed possible business bottlenecks to attract more investors.
“We ought to have increased our LNG trains, which are production lines like Qatar, having up to 22 trains, which supplies almost 20 per cent of the market share of gas to Europe,” Adetunji added.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.