Nigeria speeds up the monetisation of its vast natural gas reserves

The Nigerian government has stepped up its efforts to exploit and monetise its vast natural gas reserves, the largest in Africa but still under-exploited. To this end, on Friday 11 October, the Nigerian National Petroleum Corporation (NNPC) signed a key natural gas sale and purchase agreement with several of the world's leading energy companies, marking a significant step towards optimising the country's gas potential.

The agreement was signed with Anglo-Dutch oil company Shell, French oil company TotalEnergies and Italian oil company Eni. Together, these companies have agreed to deliver 270 million cubic feet of gas to Brass Fertilizer & Petrochemical Company. The gas will be used to produce methanol, a key organic compound used in a wide range of industries including chemicals, fuel production and plastics. This project, estimated at 3.3 billion dollars and long on hold, is finally taking a decisive step towards completion.

According to Ekperikpe Ekpo, Minister of State for Gas, the agreement will save Nigeria around $200 million in foreign currency every year, while boosting local employment. The Brass Fertilizer & Petrochemical Company project has the potential to transform the country's economic dynamic by reducing its dependence on imports and boosting its industrial production capacity.

Nigeria, Africa's leading oil producer, also holds the continent's largest proven reserves of natural gas, estimated at 5.94 trillion standard cubic metres at the end of 2023, according to data from Statista. However, despite this potential, the gas sector remains largely under-exploited compared to other world producers. In 2022, Nigeria's natural gas exports amounted to around 29.7 billion standard cubic metres, a figure still below the country's total capacity.

The Nigerian government is well aware of the need to maximise revenues from natural gas, and several initiatives have been launched to attract investment in this strategic sector. In early October, the government introduced a new legal framework aimed at attracting at least $5 billion of investment in offshore gas exploration and production. This legal framework should help to boost the gas sector, by offering investors more attractive conditions and by strengthening the legal security of contracts.

The government's aim is twofold: to stimulate investment in liquefied natural gas (LNG) for international markets and to develop local infrastructure to encourage domestic consumption. These efforts are part of a broader vision to diversify the economy, which has traditionally been dependent on crude oil, in order to strengthen Nigeria's position as a major energy player, not only in Africa, but also on a global scale.

Monetising Nigerian gas is essential to meeting the country's growing energy needs and reducing imports of expensive petrochemical products. The Brass Fertilizer & Petrochemical Company project is a concrete example of this, which could not only create jobs but also stimulate Nigeria's industrial growth. It is a crucial step towards a more strategic use of the country's natural resources.

However, for these initiatives to succeed, Nigeria will need to address a number of challenges, including improving its energy infrastructure, tackling insecurity in some oil and gas producing regions, and managing the global energy transition that could reduce demand for fossil fuels in the long term.

In conclusion, by accelerating the monetisation of its vast natural gas reserves, Nigeria is positioning itself to become a key player in the supply of energy in Africa and beyond. With strategic reforms, international investment and a clear vision, the country could soon capitalise fully on its gas potential, diversifying its revenues and strengthening its role on the global energy stage.