Experts in Nigeria's gas sector have emphasized the need for open access to gas infrastructure, payment security, and strict adherence to contracts before the country fully transitions to a willing buyer, willing seller gas market. This call was made during a panel session at the Gas Market Maturity Workshop held at the Petroleum Technology Development Fund in Abuja. The panel featured prominent industry figures, including Gbite Adeniji, James Odiase, and Tim Okon. They stressed that while the Petroleum Industry Act provides a framework for developing a competitive gas market, several structural and commercial issues must be addressed.
According to Gbite Adeniji, Nigeria needs clear regulatory triggers to determine when the gas market has attained the level of maturity required for a willing buyer, willing seller model. He identified key conditions for a functioning market, including the existence of multiple buyers and sellers, adequate infrastructure, and effective competition. Adeniji also noted that infrastructure owners must be effectively unbundled to separate gas supply from transportation, preventing market power capable of distorting competition.
James Odiase stated that the Nigerian Gas Association had advocated for a two-year transition to a willing buyer, willing seller market as far back as 2020. However, several conditions required to achieve the model remain unresolved. He emphasized that investment in gas production and infrastructure depends heavily on the ability of market participants to secure adequate returns and certainty over transactions. Odiase cited open access, payment assurance, and sanctity of contracts as critical issues that must be resolved.
Tim Okon identified infrastructure, open access, market and hub development, access for wholesale buyers, financial market instruments, and proper sequencing as key pillars of a mature gas market. He stressed that Nigeria must develop mechanisms to balance supply and demand efficiently while ensuring that buyers and sellers can access infrastructure on transparent and non-discriminatory terms. Okon also warned against excessive government intervention in a market expected to operate on commercial principles.
The experts also examined gas pricing, noting the need to balance affordability for consumers with sufficient returns for producers and investors. Odiase emphasized that gas-to-power pricing cannot simply be reduced without addressing underlying challenges in the electricity market, particularly payment security. He stressed that suppliers need confidence that they will be paid for the gas supplied, arguing that sustainable pricing must be accompanied by mechanisms capable of protecting contractual obligations.
The panel discussions formed part of broader efforts by stakeholders to establish measurable conditions and milestones for Nigeria's transition towards a more commercially driven domestic gas market under the Petroleum Industry Act. The experts agreed that the transition to a willing buyer, willing seller market should be supported by clear rules, competition, infrastructure access, reliable payment mechanisms, and enforceable contracts.
The transition to a willing buyer, willing seller market is crucial for Nigeria's gas market development. The experts' recommendations aim to ensure a sustainable and competitive market that benefits both producers and consumers. Key challenges, such as payment security and contract sanctity, must be addressed to attract investment and guarantee returns for market participants.
Key points
- Experts call for open access to gas infrastructure and payment security before transitioning to a willing buyer, willing seller gas market.
- The Nigerian Gas Association had advocated for a two-year transition to a willing buyer, willing seller market as far back as 2020.
- The experts emphasized the need for clear rules, competition, infrastructure access, reliable payment mechanisms, and enforceable contracts to support the transition to a willing buyer, willing seller market.
