Home BREAKING NEWS Embargo on Russian gas opens $176m revenue window for Nigeria

Embargo on Russian gas opens $176m revenue window for Nigeria

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By Collins Olayinka, Abuja

NMDPRA rallies stakeholders for gas utilisation to boost devt
Nigeria stands to earn $176 million, if it can explore embargo on Russian gas to supply 10.7 per cent of the total Liquified Natural Gas (LNG) supplies to Europe (512 billion cubic feet) to bridge its cash crunch challenge.

This comes as the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) urged collaborations and interventions among stakeholders to improve domestic gas utilisation in the country.

The embargo that saw cancellation of the Nord Stream II and sabotage of the Nord Stream I Yamal pipeline has opened an opportunity for Nigerian LNG to supply 10.7 per cent (55 billion cubic feet or 1.1 million metric tonnes) of the total consumption of Europe, which is 512 billion cubic feet (or 10.5 metric tonnes) yearly.

The Chief Executive of Dairy Hills Limited, Kelvin Emmanuel, described the opportunity as huge, saying at a time when the Nigerian government is borrowing money, in violation of Sections 22 and 45 of the Fiscal Responsibility Act of 2007, to pay interest on principal and refinance maturing debt, the demand shortfall that Europe currently has from the competition they are getting from consumers in South-Eastern Asia, and the impact of taking off Russian supply completely, would have provided $176 million in additional revenues for the Federal Government.

A survey done on the top 15 shipyards that build LNG vessels shows that for the year 2023, the demand for LNG vessels will grow by 14.2 per cent (from 8.7 per cent to 22.9 per cent), which suggests that the demand for LNG in South East Asia is projected to grow from 15 million metric tonnes to 56 million metric tonnes. That is 2.5 times the current capacity of NLNG.

The government should commence work on immediate deregulation of gas prices as a tool to incentivise international oil companies (IOCs) for process associated gas, which is around 700 million metric standard cubic feet at 179 flare sites yearly.

Currently, the gas flared daily in Nigeria is worth 14,600 tonnes of LNG, valued at $2.2 million daily.

Emmanuel insisted that gas is the most important comparative advantage the Nigerian government has, to restructure its existing loans and prevent debt service and technical default.

He said: “It is the most important comparative advantage to fund its budget by raising allocation for critical services, like education and healthcare. It is extremely disappointing that Qatar, which is a small nation of 2.6 million people, is doing output of 78 million tonnes per year, and has FID set up for 48 million tonnes of LNG, that will plug demand in Western Europe and South America, while Nigeria struggles to meet up with existing contractual obligations for 22 million metric tonnes.”

Undeniably, President Buhari will be remembered as the only President that did not add a single metric tonne of output to the current capacity of NLNG and was borrowing money to subsidise petrol, social investment programmes, and servicing and refinancing debt at a time of record oil and gas prices and demand globally.

A public analyst, Kalu Aja, lamented that what Nigeria has lost in the last seven years due to bad economic decisions and insecurity cannot be quantified.

He said: “The NLNG can’t operate in a vacuum. It will soon go the way of the Nigerian National Petroleum Company Limited, if things do not get better.”

Speaking at a stakeholders’ engagement on gas utilisation in Nigeria, the NMDPRA Chief Executive, Farouk Ahmed, said policy frameworks, such as the National Gas Expansion Programme (NGEP), the Decade of Gas Programme (DOGP) and establishment of the Midstream and Downstream Gas Infrastructure Fund by the Authority to catalyse gas investments are yielding significant results.

He stressed that the Authority, empowered by the Petroleum Industry Act (2021), is poised to enable growth of the industry, adding that the 12 regulations recently gazetted will unlock golden opportunities and signpost pathway to energy security.

Ahmed submitted that the engagement seeks to encourage large consumers of petroleum products to not only operate within the regulatory space but also become aware of comparative advantages between different fuels, particularly, gas which has been designated as Nigeria’s transition fuel.

Source: The Guardian

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