Nigeria’s Natural Gas Revenue in 2024: A Detailed Analysis
Nigeria’s natural gas sector played a significant role in the nation’s economy in 2024, generating approximately N8.6 trillion (approximately $5.74 billion at an exchange rate of N1,500/$) in revenue. This substantial income stemmed from the production of 2.5 trillion cubic feet (TCF) of natural gas, comprising 1.44 TCF of associated gas (found alongside oil deposits) and 1.06 TCF of non-associated gas (extracted from gas fields without oil). The revenue calculation is based on the utilization of 2.31 TCF of the produced gas, priced at the domestic base price of $2.42 per Million Metric British Thermal Units (MMBTU). With one TCF equivalent to roughly 1,025,000,000 MMBTU, the utilized gas translates to approximately 2,370,061,914 MMBTU, resulting in the aforementioned revenue figure. This income was shared between the government and private sector participants in the gas industry.
Utilization and Flaring: A Mixed Picture
While a significant portion of the produced gas was utilized, a concerning amount was also flared. Of the total 2.5 TCF produced, 2.31 TCF (92.2%) was utilized, while 192.89 billion standard cubic feet (BCF) (7.69%) was flared. The utilization breakdown reveals that 733.94 BCF was for field use, 673.64 BCF was sold domestically, and 905.34 BCF was designated for export. A small amount, 2.46 million standard cubic feet, was attributed to gas shrinkage. Despite government efforts to curb flaring, the 2024 figures represented an increase compared to 2023, when 183.52 BCF was flared out of a total production of 2.49 TCF. This rise in flaring highlights the ongoing challenges in maximizing resource utilization and minimizing environmental impact.
Production Targets and the Decade of Gas Initiative
Nigeria’s government has ambitious plans for its gas sector, aiming to increase production significantly in the coming years. The current production rate stands at an average of 7 billion cubic feet per day (BCF/D), but the government intends to boost this to 12 BCF/D. This expansion aligns with the "Decade of Gas" initiative, which envisions transforming Nigeria into a gas-based economy by 2030. This transition is driven by the desire to reduce reliance on "dirty" fuels like petrol and diesel, promoting cleaner energy sources and potentially mitigating the negative environmental consequences associated with traditional fossil fuel consumption.
Investment and Resource Potential: A Look Ahead
The Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, has expressed confidence in Nigeria’s ability to achieve these production targets. He pointed to the divestment of some international oil companies (IOCs) from shallow water to deep water operations, where substantial gas reserves exist, as a key factor driving future growth. This shift signifies a strategic focus on tapping into previously underutilized resources and underscores the potential for significant expansion in the gas sector. Nigeria boasts substantial gas reserves, with associated and non-associated gas reserves totaling 209.26 TCF, providing a solid foundation for achieving long-term production goals.
Challenges and Opportunities in the CNG Sector
In line with its gas-focused strategy, the Nigerian government has launched the Presidential Compressed Natural Gas (CNG) Initiative, promoting the adoption of CNG as a cleaner alternative to petrol and diesel. However, the widespread adoption of CNG faces hurdles. The current lack of adequate refueling infrastructure and the high cost associated with converting petrol-powered vehicles to CNG pose significant barriers to consumer uptake. Addressing these challenges is crucial for realizing the full potential of the CNG initiative and effectively transitioning to a gas-powered economy.
Overall Outlook: Balancing Growth and Sustainability
Nigeria’s natural gas sector presents a complex landscape of opportunities and challenges. The substantial revenue generated in 2024 underscores the sector’s economic importance and its potential for future growth. However, the persistent issue of gas flaring highlights the need for greater efficiency in resource utilization and a stronger commitment to environmental sustainability. The government’s ambitious production targets and the "Decade of Gas" initiative demonstrate a clear vision for the future, but the success of these endeavors hinges on addressing infrastructural limitations, promoting investment, and fostering a regulatory environment that encourages both economic development and environmental responsibility. The transition to a gas-based economy offers significant potential for Nigeria, but realizing this vision requires a concerted effort from all stakeholders to overcome the existing challenges and ensure a sustainable and prosperous future for the sector.
