Nigeria could potentially make $18.3bn from gas

Nigeria has the potential to generate up to $18.3 billion from maximising its gas sources during its energy transition, according to a report by The World Economic Forum (WEF), Renewable Energy and Energy Efficiency Associations Alliance (REEEA-A) and Marsh McLennan. However, the country is facing challenges due to the lack of infrastructure and investment required to achieve this potential. The report highlighted that over 80% of the nation’s power generation comes from gas reserves, with the remainder from oil, adding that natural gas will remain the primary source of power in the short-term, despite the shift to other renewable sources.

The report stated that the majority of gas reserves are non-associated due to the current lack of exploration infrastructure, with capital availability also limited. This limits the ability of developers to access finance, and gas distribution infrastructure lacks capital investment to support consistent gas distribution, which has led to a fluctuation in pricing and a lack of reliability for consumers. However, the report says that initiatives such as the Energy Transition Plan, Nigeria Climate Change Act and Long-Term Low Emissions Development Strategy, along with the country’s vast natural resources of oil and gas, provide a platform to combat these problems.

The report recommends that more projects must be funded by local currency to enable the growth of community-based developers. It also suggests that policy actions can help align the interest and efforts of industry actors throughout the gas value chain and help maximize efforts to improve the overall production process. The report further adds that policy recommendation is necessary to incentivize natural gas producers to prioritize domestic production.

According to Nigeria’s Energy Transition Plan, gas will play a critical role as a transition fuel in Nigeria’s net-zero pathway, particularly in the power and cooking sectors. However, the country needs $1.9 trillion to achieve net-zero by 2060, including $410 billion above projected usual spending. The report indicates that streamlining existing and new government-related energy transition legislation presents a unique opportunity for foreign capital providers to enter a market that is abundant in energy resources, has a capable workforce, and is enabled by government support plans.