NLNG: Nigeria Risks Losing Global Gas Relevance as Market Share Slips to 5%

Peter UzohoNigeria LNG Limited (NLNG) has warned that Nigeria’s position in the global liquefied natural gas market is under serious threat, with the country’s share slipping from six per cent to five per cent, currently, and further risk of falling to as low as two per cent, if urgent action is not taken to address feedstock supply challenge and low processing capacity. Managing Director and Chief Executive Officer of NLNG, Mr. Adeleye Falade, gave the warning during the NLNG Facts & Figures Presentation in Lagos, as he positioned the company as a critical pillar of Nigeria’s economy and a gateway for international investment. Falade said the decline reflected slow capacity growth compared to global competitors who were moving faster to monetise their gas reserves. He stated, “About three to four years ago, NLNG held six per cent of global LNG market share. Eventually, we’re down to five per cent. There are other countries that are growing. If we don’t do anything, we’ll go down to three per cent. We’ll go down to two per cent.“But that’s not our dream. Our dream is that we’ll continue to stay relevant even in the global space.”Falade linked the risk directly to Nigeria’s failure to scale up despite massive gas endowment.Nigeria currently has 215.19 trillion cubic feet (TCF) of proven gas reserves and an additional 600 TCF yet to be proven, according to official figures by Nigerian Upstream Petroleum Regulatory Commission (NUPRC).However, current liquefaction capacity remains at just 22 million tons per annum (MTPA) via NLNG’s Bonny Island six-train processing plant. Comparing Nigeria with other countries in the global LNG processing and supply league, Falade said Australia had a proven reserve of about 120 TCF but has a processing capacity of about 88 MTPA.According to him, Malaysia, with just 97 TCF of gas reserves, has capacity that is even more than Nigeria,“But then you look at us (Nigeria) 209 TCF and just 22 MTPA. So at that point in time, it became obvious to us that we needed to be more ambitious about our growth,” Falade said. The implication is that Nigeria risks losing billions of dollars in potential export earnings, foreign direct investment, and strategic relevance at a time when global demand for gas is still strong. Falade said the world’s shift away from dirty energy sources had created a limited window for gas-producing nations to maximise value. He stated, “While the world has moved away from sources of energy that are very dirty… gas will still be dominant in the energy mix, not just for today, not just in 10, 20, 30, up to the next 40, 50 years. But we can’t assume that window will be open for a long period of time.”He said gas applications now extended beyond power to fertilisers, petrochemicals, cosmetics, and transport, including Compressed Natural Gas (CNG) buses.“What all of that is doing is allowing us to be able to maximise that potential that God has given us as a country,” he said.For international investors, the warning signals both risk and opportunity. Risk, because delays in project execution and gas supply uncertainty could undermine Nigeria’s bankability.Opportunity, because NLNG’s growth agenda requires massive upstream investment, infrastructure, and partnerships. Competitors, such as Qatar, United States, and Australia are already expanding capacity to fill supply gaps created by geopolitical disruptions.Falade said if Nigeria failed to act, those countries will capture the market share Nigeria was losing. To counter the slide, NLNG said Train 7 was underway and will increase total LNG capacity by 35 per cent, from 22 MTPA to 30 MTPA.He said the company had also begun exploratory work on Trains 8, 9 and 10 in line with its continuous expansion drive.Falade said, “That ambition is why Train 7 is underway, and why NLNG has begun exploratory work on Trains 8, 9 and 10. Still very much at the embryonic stage, but it’s one that is already having conversations around… So we do have a growth agenda.”He stressed that expansion was a precondition for Nigeria to remain competitive and attract long-term capital. Falade insisted that a major bottleneck for its expansion agenda was feedstock supply shortfall, pointing out that with Shell and Eni (its traditional gas suppliers) divesting from onshore assets, NLNG has had to diversify its supply base. “I think today, we have close to 70-75 per cent of our gas supply that is now coming from outside of the affiliates of our shareholders,” he said.Last year, NLNG signed Gas Supply Agreements (GSAs) with six third-party suppliers. The company’s target is to contract 110 to 150 per cent of plant gas requirement to provide a buffer against outages. He stated, “Train 7 came with dedicated gas supply opportunities that were identified upstream. In fact, it’s a conditional precedent. If you don’t have line-of-sight to gas, you won’t take final investment decisions.”Falade warned that if shortages persisted, NLNG might be forced to “rethink our model”, similar to Dangote Refinery’s move towards vertical integration. “We’re not yet at that stage, but it’s also an option that is on the table,” he said. NLNG outlined several steps needed to safeguard Nigeria’s position. First, it said, was to accelerate upstream gas development and infrastructure to bring stranded gas to market.Falade said much of Nigeria’s 209 TCF proven gas remained inaccessible due to lack of pipelines and processing facilities. He stressed the need to complete the technical and commercial frameworks for Trains 8, 9 and 10 so Nigeria could move from planning to execution before the global gas window narrowed. Falade also confirmed that Force Majeure remained in place on the company’s Bonny Island plant, but discussions on sustainable exit conditions were ongoing. NLNG had in October 2022 declared force majeure on its Bonny Island facility due to widespread flooding that disrupted gas supply to the plant.Falade said, “It’s still in place… In order for you to move out of it, you must do it in a way that is sustainable and shows that you can actually exit it. But as of today, we’re still in Force Majeure.”He said the message to government, investors, and Nigerians, generally, was clear: expand now or lose out. “We have to unleash our gas potential as a company, but also as a country,” he said. “People talk about us and what we have been doing and we acknowledge it, but we think that journey has just started,” he stated. He added that NLNG remained committed to its role as a major contributor to government revenue.But Falade said that role could only be sustained if Nigeria scaled capacity in line with global competition. With the energy transition accelerating, NLNG said the next two to three years will determine whether Nigeria would consolidate its place among top LNG exporters or cede ground to faster-moving rivals.

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