Overview

Nigeria holds the largest gas reserves in Africa, as well as the second-largest oil reserves. The country produces more than 2.5 million barrels of oil per day and is the fifth-largest exporter of crude oil in the world. Gas production is a priority for the government, even though it is already one of the world’s largest gas producers. Despite the large reserves, many producers lack the infrastructure to get the gas to market, and therefore flare the excess.

The export market is dominated by the Nigeria LNG facility on Bonny Island, which was built in the late 1990s and brought onstream in 1999. It has since grown to become a six-train facility, producing 22.1 mtpa of LNG and providing 10% of the world’s supply. A seventh train is under construction, and this will bring production up to 30 mtpa. However, vandalism is a huge problem for the facility and it has regularly declared force majeure because of supply issues.

Nigeria is the most populous country in Africa and is endowed with significant natural resources that could be used to diversify the economy. There is the potential to build a large domestic market for gas, including expanding sorely needed power generation capacity. Gas could also be used to attract industries such as petrochemicals and fertiliser manufacturers. Political difficulties and regional instability have stopped this from happening – even though President Goodluck Jonathan’s administration has singled out the power market as a key area for reform.

Allegations of corruption and pollution caused by the oil industry have led to the formation of rebel movements in the oil-rich Niger Delta. The Movement for the Emancipation of the Niger Delta is an umbrella organisation that carries out attacks on oil infrastructure and has turned oil theft into an established business. This often affects the gas pipelines that run alongside oil pipelines.

Page updated: 22/08/2014