Nigeria’s gas export faces major threat from G7 renewable energy priorities

Nigeria’s efforts to increase its gas export in addition to deepening its domestic gas utilization is set to face a major threat arising from the energy transition drive of the world’s seven richest countries (G-7).

Nigeria’s gas reserves stand at about 209 trillion standard cubic feet and about 37 billion barrels of crude oil reserves.

Recently, the G7 Ministers’ Meeting on Climate, Energy and Environment in Sapporo, Japan agreed on a call for a reduction in gas consumption, increasing electricity generation from renewable sources, phasing out fossil fuels quicker, and building no new coal-fired plants.

The G7 environment and energy ministers, however, could not agree on a specific date to exit coal power, as France’s Agnes Pannier-Runacher noted that the G7 countries have agreed that the first response to the energy crisis must be to reduce energy and gas consumption.

Pannier-Runacher said: “For the first time, the G7 said that we must accelerate the phasing out of all unabated fossil fuels… Finally, it sent a message about accelerating renewable energy.

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The development is coming at a time when Nigeria is shifting attention to gas with the hope that the resources would serve as a transition fuel.

Nigeria has adopted gas as its transition fuel and has invested in several initiatives to expand gas utilization and export, including the US$2.8bn AKK pipeline, the US$13bn Trans-Sahara Gas Pipelines project, and the US$25bn Nigeria-Morocco Gas Pipeline.

Analysts say the pipeline projects are essential to optimize the country’s resources, but the current geopolitical issues and energy transition efforts have altered the market demand dynamics.

However, the possibility of heat waves arising from the current surge in temperature in many countries could trigger spikes in fossil fuel demand to avoid widespread outages.

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This could be the last low-hanging fruit for African producers in the global LNG market. Hence, Nigeria and other African producers should increase domestic processing capacity and domesticate the exploration and utilization of the continent’s oil and gas resources to bridge the demand-supply mismatch.

Recently, the Nigerian National Petroleum Company Limited (NNPCL), harped on the need to complete the Ajaokuta-Kaduna-Kano (AKK) pipeline, Trans-Sahara Gas Pipelines and Nigerian -Morocco pipeline.

The Trans-Sahara Gas Pipelines project is to cost $13 billion, while the Nigerian-Morocco pipeline, a 6,000 kilometre project, which would traverse 13 African nations along the Atlantic coast and supply the landlocked countries, would cost $25 billion and the 614 kilometre AKK pipeline was awarded for $2.8 billion.

Although Nigeria has created several initiatives to reinvent gas amid dwindling oil revenue, the Ukraine and Russia war has changed the dynamics in the energy sector, forcing Europe to focus on the resource and Africa as a strategic partner for the product.