According to Nigeria’s upstream oil and gas regulator, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the country’s gas reserves have reached an all-time high of 210.5 trillion cubic feet. This positions Nigeria as the largest holder of natural gas reserves in Africa and among the top ten globally.
A significant amount of the gas produced during oil extraction, referred to as associated gas, poses distinct challenges. Unlike crude oil, it cannot be stored in tanks and is often regarded as a burden at production sites. Associated gas is frequently flared due to the lack of a well-defined gas utilisation and commercialisation strategy.
Gas flaring persists in Nigeria for several reasons:
Some oil fields lack the infrastructure to capture and utilise associated gas, resulting in stranded gas.
There are limited reservoirs available for gas reinjection and storage.
Developing and installing gas infrastructure – gas treatment plants with associated gas pipeline networks – is prohibitively expensive.
The challenging terrain of the oil and gas locations in the Niger Delta region of Nigeria hampers efforts to gather and transport gas.
The local, regional, and international markets for natural gas remain limited.
The Infrastructural Challenge
Despite its vast gas resources, Nigeria remains significantly underrepresented in the global gas market, largely due to underinvestment, infrastructure gaps, and policy uncertainties.
As global gas demand reaches 115 billion cubic meters (bcm) in 2024, Nigeria stands at a strategic crossroads. Ambitious projects like the Ajaokuta-Kaduna-Kano Pipeline, Nigeria-Morocco Gas Pipeline and emerging Floating LNG (FLNG) facilities offer transformative opportunities to monetise gas, expand regional access, and enhance energy security. However, persistent challenges such as pipeline vandalism, limited processing capacity, and unclear fiscal terms continue to hold back progress.
The Energy Challenge
Given the ongoing energy crisis and the unreliable electricity supply from the national grid, forcing many citizens to rely on personal generators, there is an urgent need to reassess the country’s current energy strategy.
Nigeria holds immense energy potential. With vast reserves of associated and non-associated gas resources, the country should be a powerhouse of energy production and distribution. Yet, for decades, Nigeria has struggled with persistent energy challenges — unreliable power supply, gas flaring, underutilised resources, and a high dependence on personal generators. Addressing these challenges is critical not only for economic growth but also for social stability and environmental sustainability.
Strategies to Address the Infrastructural and Energy Challenges
To unlock its vast gas potential and position itself as a leading Energy Producer, Nigeria should prioritise the following strategic steps:
1. Accelerate Strategic Gas Projects: Fast-track priority projects like the Brass LNG, Olokola LNG, Nigeria-Morocco Gas Pipeline, AKK pipeline, and Floating LNG facilities. These projects would provide job opportunities and also additional revenue for Nigeria.
2. Promote Domestic Gas Utilisation (NG, CNG, LPG and LNG): This would make gas readily available and reduce environmental issues e.g. deforestation.
3. Expand gas-to-power and gas-based industrialisation initiatives to create local demand, reduce flaring, and stimulate broader economic growth.
4. Invest in LNG trucking and mini-LNG solutions to reach off-grid users and remote areas in the hinterland.
5. Establish secure gas corridors and incentivise private sector participation in midstream and downstream infrastructure development.
6. Strengthen partnerships with international financiers to ensure timely execution and financing.
7. Establish a clear, competitive regulatory framework.
8. Finalise and implement transparent, stable, and investor-friendly gas fiscal terms under the Petroleum Industry Act (PIA).
9. Streamline approval processes and eliminate regulatory bottlenecks that delay project development.
10. Drive Investment Through Public-Private Collaboration
11. Improve investment climate by de-risking gas projects through government-backed guarantees, concessional financing, and infrastructure bonds.
12. Foster partnerships with development finance institutions (DFIs) and multilateral agencies to unlock capital inflow.
13. Invest in carbon capture and storage (CCS) and other decarbonisation technologies for long-term sustainability. Nigeria will not only grow its gas market share but also strengthen its role in Africa’s energy transition and global LNG supply when the steps highlighted above are fully implemented.
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