Industry leaders at the fourth Gas Investment Forum have identified major constraints to increasing gas production in Nigeria. Inadequate infrastructure, weak bankable demand, and uncertainty around domestic gas pricing are significant challenges. These issues hinder the development of new gas projects, despite the country's potential. Experts discussed these challenges, emphasizing the need for solutions to unlock Nigeria's gas production potential.
Dr. Abiodun Ogunjobi, Group Chief Technical Officer at NewcrossEP, highlighted infrastructure as a major constraint. Existing infrastructure is operating at capacity, and third-party facilities may not accommodate additional production. Ogunjobi stated that infrastructure is the key bottleneck, and producers cannot invest in new infrastructure where projects are not commercially viable. Cash flow and payment challenges also affect project development, particularly the cost of surface facilities required to move gas to the market.
Mariah Lucciano-Gabriel, General Manager, Gas Commercial, at Sahara Group, emphasized that the viability of gas projects should be assessed beyond headline gas prices and the fiscal regime. Investors must consider the total risk-adjusted cost and time required to move gas from the reservoir to the customer. Delays associated with pipelines, community issues, and securing bankable demand can weaken project economics. Lucciano-Gabriel identified infrastructure, regulatory certainty, project economics, bankable demand, and execution as key factors in determining project viability.
Lucciano-Gabriel noted that power and fertilizer companies can serve as anchor customers due to their capacity to take large volumes. However, demand must be bankable. Joseph Adetuberu, Associate Vice President, Gas Business, at Heirs Energies, suggested that Nigeria should focus on maximizing existing gas resources rather than concentrating solely on new exploration. He noted that more than half of current gas production is held by independent producers, which may not have the financial capacity of international oil companies for large-scale exploration.
Adetuberu stated that a significant portion of Nigeria's gas reserves is associated gas, and higher oil production could result in additional gas production. He stressed the need to convert domestic demand into bankable demand and urged independent producers to maintain financial discipline. Francis Nwaochei, Council Chairman, Society of Petroleum Engineers, Nigerian Council, emphasized that technology can help lower the cost of developing and distributing gas.
Nwaochei cited the use of artificial intelligence in analyzing reservoir and field data, which generated 16,000 opportunities for further examination and helped identify lost or bypassed opportunities. He said maximizing existing fields would enable producers to derive more value from current resources. Nwaochei also called for greater government-industry coordination and consistent interpretation of regulations, particularly clarity around the domestic gas pricing framework.
The experts' recommendations aim to address the challenges facing Nigeria's gas production sector. By addressing infrastructure, pricing, and regulatory challenges, the country can unlock its gas production potential. The fourth Gas Investment Forum provided a platform for industry leaders to discuss these issues and explore solutions. Implementing these recommendations could help Nigeria harness its gas resources more effectively.
Key points
- Inadequate infrastructure is a major constraint to developing new gas projects in Nigeria.
- Uncertainty around domestic gas pricing is a significant challenge to increasing gas production.
- Technology can help lower the cost of developing and distributing gas in Nigeria.
