Nigeria’s gas projects suffer $76m funding shortfall, despite Europe’s interest
At a time Europe is seeking to pull the plug on Russian gas in the wake of Moscow’s war with Ukraine, gas infrastructure projects capable of making gas a critical catalyst in Nigeria’s economy suffered a funding shortfall of N32.4 billion in the first half of 2022.
With the European Union (EU) courting Nigeria and other African energy giants with abundant gas reserves for alternative energy sources, some industry analysts had expected the Nigerian National Petroleum Company Limited (NNPC) to ramp up investment in gas infrastructure to meet increasing demands.
Data obtained from the NNPC showed that the state-owned company invested N8 billion in the national domestic gas development project in H1 2022 as against a budget of N25 billion, while the gas infrastructure projects got N7.4 billion, less than a third of the N23 billion budgeted.
“It’s impossible to find the rationale for this development, especially in a critical point where Europe is hunting for more gas,” Niyi Awodeyi, CEO of Subterra Energy Resources Limited, said.
He questioned NNPC’s inability to prioritise funding of big-ticket gas projects that are expected to create thousands of new jobs, spur domestic gas demand, generate electricity, strengthen the country’s revenue base and turn Nigeria into a dominant geopolitical player in Africa, just like Australia, Russia or Qatar.
“Without required investments, Europe may switch its attention to other smaller gas-producing countries with better investment strategies,” Awodeji said.
Data from the NNPC also showed that revenue from gas feedstock to Nigeria LNG Limited amounted to $387.72 million in June 2022.
Isaac Botti, an energy expert attached to one of Nigeria’s multinationals, believes a lack of a political will could be the biggest challenge facing Nigeria’s opportunity to profit from Europe’s plan to pull the plug on the importation of Russian gas in the wake of Moscow’s war with Ukraine.
“Every real commitment should be backed by actions. So far, we are not seeing commensurate efforts on the part of the Nigerian government,” he told BusinessDay.
Botti said although Nigeria and Algeria would be the major gas suppliers, everything would “boil down to the political will of the Nigerian government to ensure that the project kick-starts.”
Two weeks ago, Algerian, Nigerien and Nigerian energy ministers signed a memorandum of understanding for the construction of a gas pipeline across the Sahara Desert that will supply Europe with additional gas.
The pipeline, called the Trans-Saharan Gas Pipeline, will have a total length of about 4,128 kilometres (2,565 miles), of which 1,037 kilometres will pass through Nigeria, 841 kilometres through Niger and roughly 2,310 kilometers through Algeria.
Findings by BusinessDay showed most of the 30 billion cubic metres of gas will come from the Niger Delta — a coastal region on the Atlantic Ocean belonging to Nigeria and boasting Africa’s biggest oil reserves.
“Infrastructure investment is indispensable if Nigeria seeks to monetise its gas potential from Europe’s current fiasco,” Charles Akinbobola, energy analyst at Lagos-based Sofidam Capital, said.
