International Institute for Sustainable Development has released a new report on Nigeria’s plans to rapidly expand LNG production.
The report, A Balancing Act: Considerations for the expansion of liquified natural gas projects in Nigeria, highlights how USD18.5 billion worth of new LNG infrastructure currently planned may put the country in a precarious economic situation as global gas demand falls, putting it at risk of stranded assets.
The report warns that exporting LNG will further entrench the country’s fossil fuel dependence, and leave it vulnerable to volatile international markets. Three key risks are identified in the report:
One is that Nigerian LNG exports may struggle to compete on the global market after 2030; and that replacing oil revenues with LNG may not generate expected income; coupled with the fact that there is a “high likelihood” that new LNG infrastructure may be stranded.
The report also adds that a major effort to expand Nigeria’s LNG exports presents a risk of stranded assets as European demand for gas declines in line with climate targets.
Although the government has described 2021-30 as the “decade of gas”, signaling its intent to focus on this resource, the LNG production has been marked by conflicts, theft, and risks around the transport of gas, fuelling concerns about the industry’s impact on local communities.
Environmental issues also include gas flaring, greenhouse gas emissions, and health issues associated with emissions.
The reports also believe that attempts to substitute declining oil revenues with LNG exports may not be successful due to uncertain future demands for LNG in the global marketplace. It adds that global trends favoring clean energy may clash with increased LNG investment and the shift to a low-carbon world could leave Nigeria with another fossil-based income source determined by external global price fluctuations.
Renowned for its global role in oil and gas exports, Nigeria faces an imminent economic shift due to declining oil production, fiscal constraints, meeting the country’s energy needs, and responding to environmental concerns
Nigeria is the world’s sixth-largest LNG exporter, with a 6% market share in 2022 (Energy Connects 2022), producing an annual capacity of 22.5 million tonnes (Blakeway, 2024; Energy Connects, 2022) with plans for further expansion
Debates remain ongoing regarding emission responsibilities for African nations amid a diminishing LNG market. This report explores Nigeria’s position in its quest to expand its LNG infrastructure by responding to three questions: • What is the viability of LNG expansion in Nigeria’s economy? • What are the socio-economic and energy supply impacts of LNG? • What risks will the LNG expansion pose should it fall short of envisaged expectations?
Nigeria has six independent LNG trains producing a total of approximately 22 million tonnes per annum (MTPA),3 mainly for export, as of January 2024. All six trains are located at a 2.27 km2 plant on reclaimed land on Bonny Island (Pepple & Egba, 2021) along the Nigerian coastline
The engineering, procurement, construction, installation, testing, and commissioning schedule for Train 7 could be about 4 years, while the operations of the train could be up to 25 years and beyond (Nigeria LNG Limited [NLNG], 2019). Total Energies has a 15% stake in NLNG plants, Shell has a 25.6% stake, and Eni holds 10.4% (LNG Prime Staff, 2023)
Today, there is increasing focus on LNG in Nigeria, and it is already the world’s sixth largest LNG exporter, with a 6% market share in 2022 and an annual production capacity of 22.5 million tonnes. Also, Nigeria’s economy remains heavily dependent on oil exports, but output has fallen in recent years.
