Inaction on LNG Projects Costs Nigeria Billions
Nigeria Loses $30 Billion Due to Delayed Gas Projects
Years of inaction and political indecision have cost Nigeria an estimated $30 billion in potential revenue from its natural gas reserves. With 209 trillion cubic feet (tcf) of proven gas, Nigeria holds Africa’s largest reserves, but delayed progress on key Liquefied Natural Gas (LNG) projects has kept the country from realizing its full economic potential. The Nigerian National Petroleum Corporation (NNPC) has now shifted its focus back to the Brass and Olokola LNG projects, but the lack of action over the years has led to substantial financial losses.
Untapped Potential in Gas Reserves
Nigeria’s gas reserves account for only 12% of Russia’s 1,680 tcf, yet the European nation earns over $400 million daily from gas sales to Europe. Nigeria could have been earning similar figures weekly had its LNG projects been developed as planned. The stalled Olokola LNG ($9.8 billion) and Brass LNG ($20 billion) projects, initiated in 2005 and 2003, respectively, were expected to add over 22 million tonnes per annum (mtpa) to Nigeria’s gas capacity. However, the projects have yet to move beyond the planning stages, leaving Nigeria lagging behind other global gas suppliers.
Missed Opportunities Amid Global Energy Demand
Russia’s invasion of Ukraine in 2022 prompted European countries to seek alternatives to Russian gas, creating a prime opportunity for Nigeria. Had the Brass and Olokola LNG projects been operational, Nigeria could have capitalized on this shift in the global energy landscape. These projects were intended to monetize Nigeria’s vast gas reserves, stimulate domestic gas demand, generate electricity, and diversify the government’s revenue base.
The potential benefits went beyond revenue. Thousands of jobs would have been created, and the projects would have positioned Nigeria as a dominant geopolitical player in Africa’s energy market. However, lack of political will, slow decision-making, and disagreements stalled these initiatives, costing Nigeria dearly.
Efforts to Revive LNG Projects Underway
At the 2024 Gas Technology Conference in Houston, Texas, NNPC announced that it is now in talks with investors to revive the Brass and Olokola LNG projects. According to Umar Ajiya, Chief Financial Officer of NNPC, past gas price fluctuations and the high capital expenditure required for these projects discouraged investment. However, Ajiya emphasized that with abundant gas resources worldwide, Nigeria must act swiftly to bring in partners to avoid missing further opportunities.
The Olokola LNG project, initiated in 2005, was initially a partnership between NNPC, Chevron, Shell, and BG. However, these international oil companies (IOCs) withdrew from the project, leaving NNPC to handle it alone. Similarly, the Brass LNG project, a joint effort between NNPC, Total, ConocoPhillips, and Eni, was abandoned when ConocoPhillips withdrew in 2013.
Rebuilding Investor Confidence in Nigeria’s Energy Sector
Reviving the Brass and Olokola LNG projects is critical for Nigeria’s future in the global energy market. Experts believe that with the current global demand for LNG, these projects could have provided more than 20,000 jobs during construction and thousands more once operational. The renewed interest in these ventures highlights the urgency of bringing in long-term investors through public-private partnerships, ensuring the projects are commercially viable and able to generate consistent revenue.
As Etulan Adu, an international energy analyst, points out, concerns about project economics and investment justification were major reasons for delays in making the Final Investment Decision (FID) on these projects. With the European energy crisis still unresolved and demand for LNG rising globally, Nigeria has a critical window of opportunity to re-establish itself as a key player in the LNG market.
Inertia and Delayed Projects Impact Nigeria’s Energy Prospects
Both the Brass and Olokola LNG projects have remained on the drawing board for decades, despite billions of dollars already being invested in them. This prolonged inaction, driven by political indecision and bickering among stakeholders, has significantly delayed Nigeria’s ability to monetize its gas reserves. In addition to losing out on billions in revenue, Nigeria has failed to meet growing international demand for clean energy, further limiting its influence in the global energy transition.
Nigeria’s Olokola LNG project was initially designed to produce about 12.6 mtpa of LNG, along with by-products such as 1.25 mtpa of Liquefied Petroleum Gas (LPG) and 1.04 mtpa of condensate. The Brass LNG project, located on Brass Island in Bayelsa State, was expected to produce 7.7 MTPA of LNG using advanced APCI LNG Process technology. Both projects represent significant missed opportunities, which NNPC is now working to correct.
Nigeria’s Energy Future: Time for Action
To become a global player in the LNG market and benefit from the current high demand for natural gas, Nigeria must act quickly to complete these projects. Experts like Jide Pratt, an oil and gas consultant, argue that a lack of political commitment has been Nigeria’s biggest obstacle in transforming these projects into profitable ventures. Without action, Nigeria risks falling further behind in the global energy race.
Nigeria Social Media Reactions to LNG Delays
- @NaijaEnergyWatch: “Nigeria could have been reaping billions from LNG if we didn’t stall on these projects! We need urgent action. #BrassLNG #OlokolaLNG”
- @FemiTheEconomist: “Years of political indecision have cost us $30bn. We need to fix our energy sector ASAP. #NigeriaGas #EnergyFuture”
- @OilGasGuruNG: “It’s painful to see Nigeria losing out on opportunities while Europe scrambles for gas. We must revive our LNG projects! #GasForGrowth”
- @ChiomaLNGExpert: “Imagine the jobs and revenue we lost by stalling Brass and Olokola LNG. This needs to change, NOW. #LNGOpportunity”
- @TundeOilWatch: “Nigeria could have been a global LNG leader by now. Delays are costing us dearly. #OlokolaLNG #BrassLNG”
- @EnergyEconomyNG: “$30bn lost because of inertia in our energy sector. NNPC needs to act fast to recover what we can. #NNPCAction”
- @AdaGasWarrior: “With Europe cutting Russian gas, Nigeria could have stepped in. We’ve missed huge opportunities. #NigeriaLNG”
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