Portugal, seeking to further diminish its reliance on Russian natural gas, has announced its intention to increase imports of liquefied natural gas (LNG) from Nigeria and the United States. This strategic move comes in the wake of sanctions imposed on Russia following its invasion of Ukraine, and aims to solidify Portugal’s energy independence. While Portugal has already significantly reduced its dependence on Russian gas, with LNG imports accounting for nearly all of its natural gas consumption, the government aims to completely eliminate any remaining reliance on Russian supplies. This diversification strategy is crucial for Portugal’s energy security, especially considering the geopolitical instability caused by the ongoing conflict in Eastern Europe. The increased LNG imports from Nigeria and the US will further bolster Portugal’s energy resilience and reduce vulnerability to potential supply disruptions.
The shift towards Nigeria and the US as primary LNG suppliers reflects a broader European trend of diversifying energy sources. Historically, Russia has been a major supplier of natural gas to Europe, but the geopolitical tensions have prompted European nations to seek alternative sources. Nigeria, with its abundant natural gas reserves, has emerged as a key partner for Portugal and other European countries. Similarly, the United States, with its growing LNG export capacity, is increasingly becoming a significant player in the global LNG market. This transatlantic energy partnership reinforces the strategic alliance between the US and Europe while simultaneously bolstering energy security on both sides of the Atlantic.
Portugal’s reliance on LNG has grown significantly in recent years, and the country is now almost entirely independent from Russian gas. Data from Portugal’s electricity and gas grid operator, REN, reveals that in 2024, almost all of the country’s imported natural gas was in the form of LNG. Nigeria was the largest supplier, accounting for over half of the LNG imports. The United States followed closely, contributing approximately 40%. Russia’s share of Portugal’s LNG imports dwindled to a mere fraction, a stark contrast to its more prominent role in previous years. This rapid shift in supply sources underscores the effectiveness of the sanctions and Portugal’s commitment to diversifying its energy portfolio.
However, increased US LNG exports, driven by policies promoting domestic energy production, could have significant repercussions for Nigeria’s economy. Nigeria, Africa’s largest oil producer, heavily relies on oil revenue, which constitutes a substantial portion of its national budget. A surge in US oil and gas production could depress global energy prices, potentially jeopardizing Nigeria’s fiscal stability and economic growth projections. The Nigerian government’s budget calculations are based on optimistic oil price projections, and a significant price drop could lead to budget shortfalls, requiring increased borrowing at potentially unfavorable interest rates.
The potential for falling oil prices poses a significant threat to Nigeria’s economic and social development. Lower oil revenues could necessitate cuts in government spending, impacting essential services and infrastructure projects. This could exacerbate existing inequalities and push more people into poverty. Moreover, reduced federal allocations to states could further strain regional disparities and create social unrest. The ripple effects of falling oil prices could extend across various sectors of the Nigerian economy, hindering economic diversification efforts and potentially slowing overall growth.
Therefore, while Portugal’s move to secure alternative LNG supplies from Nigeria and the US enhances its energy security, it also highlights the complex interplay of global energy markets and the potential economic vulnerabilities of oil-dependent nations like Nigeria. The increased US energy production, while beneficial for its own energy independence and potentially for European allies seeking to diversify their sources, poses a direct challenge to Nigeria’s economic stability. This situation underscores the need for Nigeria to accelerate its economic diversification efforts and reduce its reliance on oil revenue to mitigate the risks associated with fluctuating global energy prices. It also highlights the importance of international cooperation and strategic partnerships to address the challenges and opportunities presented by the evolving global energy landscape.
