Sixty percent of Nigeria’s population lacks reliable electricity, a statistic that seems almost impossible given the country sits atop 208.83 trillion cubic feet of proven natural gas reserves. This paradoxโenergy poverty amid energy abundanceโhas defined Nigeria’s development challenges for decades.
Simbi Wabote, who led Nigeria’s Content Development and Monitoring Board from 2016 to December 2023, argues this disconnect represents the country’s greatest untapped opportunity.
“I think the opportunity is in the gas sector, developing the gas sector,” Wabote said recently. “Nigeria is a gas rich nation, almost 203 trillion cubic feet of gas proven. On proven, if they search more, you look at it to about 600 trillion cubic feet.”
His perspective challenges Nigeria’s traditional oil-centric approach to energy development. While oil has dominated headlines and government revenues for six decades, Wabote contends that gas development offers more sustainable economic prospects.
Current production figures support his assessment. Nigeria extracts approximately 7.5 billion standard cubic feet of gas daily, a fraction of what the reserves could sustain. At current rates, proven reserves alone could last 80 years. Doubling production would still provide four decades of supply from proven resources.
Yet Nigeria imports refined petroleum products while millions of citizens rely on diesel generators for basic electricity needs. The irony isn’t lost on industry observers who watch one of Africa’s energy giants struggle with chronic power shortages.
The electricity crisis
Power generation remains Nigeria’s most persistent infrastructure failure. Rolling blackouts affect businesses and households nationwide, forcing widespread dependence on expensive, polluting generators.
“Nigerian businesses like you know, Nigeria itself is challenged heavily with types of providing electricity for its people. Almost 60% of the population don’t enjoy constant electricity,” Wabote noted.
Gas-fired power plants could address this chronic deficit. Natural gas burns cleaner than oil or coal while providing reliable baseload generation. Former President Muhammadu Buhari launched a “Decade of Gas” program in March 2021, attempting to shift Nigeria from primarily exporting gas to consuming it domestically.
The initiative targeted expanded gas use across power generation, industrial applications, and household cooking fuel. Implementation, however, has lagged behind rhetoric.
NCDMB’s gas investments
Under Wabote’s leadership, NCDMB invested across multiple segments of the gas value chain. The board partnered with NEDO Gas Processing Company to establish an 80 million standard cubic feet per day processing plant at Kwale in Delta State. The facility, commissioned in January 2022, includes a 300 million standard cubic feet per day gas gathering hub.
NCDMB also entered partnerships targeting liquefied petroleum gas infrastructure. Projects included a 5,000-metric-ton LPG storage and loading terminal with Triansel Gas Limited and LPG bottling plants across ten northern states through Butane Energy partnerships.
One partnership with Brass Fertilizer aimed to develop a 10,000-metric-ton per day methanol production facility, though funding challenges have slowed progress.
Another partnership with Southfield Petroleum targeted a 200 million standard cubic feet per day processing plant at Utorogu in Delta State, designed to produce 123,000 metric tons of LPG annuallyโapproximately 10% of Nigeria’s current LPG import requirements.
Manufacturing partnerships included composite LPG cylinder production facilities targeting 1.2 million units annually, addressing domestic demand while creating potential export opportunities.
Comparative advantages
Wabote’s gas preference reflects broader market dynamics. Global oil markets face increasing pressure from renewable energy transitions and climate policies, potentially constraining long-term demand.
Gas markets benefit from the fuel’s role as a bridge energy source during transitions away from coal. International buyers view gas as a cleaner alternative while renewable infrastructure develops.
“The gas market, it’s a lot more cleaner fuel than hydrocarbon,” Wabote observed.
Nigeria’s gas reserves offer scale advantages for major industrial development. Processing facilities, petrochemical plants, and fertilizer production require substantial, long-term gas supplies that Nigeria’s resource base can support.
Regional pipeline projects could export Nigerian gas to neighboring countries while generating foreign exchange. LPG distribution networks could extend beyond Nigeria’s borders, leveraging resource advantages to capture regional market share currently served by North African and Middle Eastern imports.
Infrastructure barriers
Realizing gas potential requires significant infrastructure investments. Current pipeline networks reach limited areas, constraining industrial development and household access. Distribution infrastructure for LPG remains underdeveloped despite abundant domestic raw materials.
Processing capacity needs expansion. Much of Nigeria’s associated gas production continues being flared rather than captured and processed, representing economic waste and environmental damage.
Security challenges in gas-producing regions disrupt operations and deter investment, particularly affecting onshore facilities.
Market realities
International gas markets have demonstrated volatility recently, with prices spiking during supply disruptions before moderating as new capacity emerges. Nigeria’s gas development must account for these cycles when planning infrastructure investments.
Nigeria’s proximity to European markets provides potential advantages as European buyers seek supply diversification. Domestic market development could provide more stable demand foundations than export-dependent approaches, particularly for power generation and industrial applications.
Financing large-scale infrastructure projects requires substantial capital commitments that may prove difficult given Nigeria’s fiscal constraints. Regulatory frameworks for gas pricing and distribution need refinement to attract private investment while ensuring affordable domestic access.
Technical capabilities
Nigeria’s gas processing capabilities, developed through partnerships and local content requirements, could potentially be exported to other African countries discovering gas resources. The technical expertise NCDMB cultivated through its partnership strategy represents an exportable asset.
Countries like Namibia, where oil majors have discovered enormous reserves, present opportunities for Nigerian companies to extend capabilities developed domestically. This regional expansion could provide revenue streams when domestic project cycles create activity gaps.
Long-term outlook
Simbi Wabote’s gas emphasis aligns with global energy patterns favoring natural gas as a bridge fuel. Countries worldwide use gas to replace higher-emission fuels while building renewable capacity.
Success requires coordinated policy development, infrastructure investment, and private sector engagement across multiple government levels and economic sectors. Nigeria’s institutional capacity to organize these elements remains questionable.
The scale of Nigeria’s gas resources suggests substantial opportunity. Whether the country can develop necessary institutional and financial capabilities to realize this potential remains central to Nigeria’s energy future.
Gas development offers the possibility of addressing chronic power shortages while building industrial capabilities that could support broader economic diversification. For a country that has struggled to translate hydrocarbon wealth into widespread prosperity, natural gas represents both promise and another potential missed opportunity.
The above information does not constitute any form of advice or recommendation by London Loves Business and is not intended to be relied upon by users in making (or refraining from making) any finance decisions. Appropriate independent advice should be obtained before making any such decision. London Loves Business bears no responsibility for any gains or losses.
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