The Nigerian oil and gas sector, once filled with promise upon the declaration of the "Decade of Gas" by former President Muhammadu Buhari, now finds itself grappling with inefficiencies and setbacks, much to the disappointment of stakeholders.
As Nigeria, Africa's largest oil producer, needs help to keep pace with its counterparts, questions arise regarding the nation's ability to leverage its abundant gas resources for economic development.
Three years have passed since the proclamation was made on March 29, 2021. However, instead of witnessing exponential growth akin to a thriving partnership, Nigeria's gas sector has encountered missed deadlines, operational inefficiencies, and a litany of excuses.
A recent investigation unveils the grim reality, attributing Nigeria's stagnation in the gas sector to a myriad of challenges hampering the progress of crucial pipeline projects across the nation.
Despite the global trend favouring gas over crude oil for economic advancement, Nigeria's ambitions to transition have been stymied by sluggish progress on key pipeline projects.
Foremost among these is the Ajaokuta-Kaduna-Kano (AKK) pipeline, a 614 km-long conduit envisioned to transport natural gas from Nigeria's southern regions to the central heartland. Commissioned in July 2020 with a projected completion date of 2023, the AKK pipeline remains distressingly incomplete.
Economist Kelvin Emmanuel shed light on the reasons behind the AKK's delay, citing a Mareva injunction obstructing progress and procurement cost distortions due to foreign exchange revaluation losses. This legal hurdle, employed to prevent asset dissipation pending potential judgments, has compounded the challenges besetting the AKK project.
In the same vein, the Obiafu-Obrikom-Oben (OB3) gas pipeline, colloquially known as the East-West pipeline, has encountered protracted delays despite initial optimism.
With an estimated cost of $700 million and a capacity of 2000 million cubic feet per day, the OB3 pipeline's completion timeline has been repeatedly extended since its inception in 2016. Various setbacks, including adverse weather conditions and contractor transitions, have thwarted efforts to bring the project to fruition.
The Trans-Saharan pipeline, a monumental $13 billion endeavour spanning over 4,000 km from Nigeria to Algeria, faces geopolitical hurdles following a military coup in Niger. Diplomatic tensions between Nigeria and Niger have impeded progress, jeopardising the pipeline's ambitious goals of regional energy integration.
Meanwhile, the West African Gas Pipeline (WAGP), intended to supply natural gas to countries across West Africa, has fallen short of expectations. Despite spanning 678 kilometers and linking Nigeria to Benin, Togo, and Ghana, the pipeline's reach has been curtailed, hindering its potential to fulfill regional energy demands.
Gas Flaring/Wastage
In 2023, Nigeria flared natural gas worth $1 billion, according to data from the Nigeria Gas Flare Tracker, a satellite-based technology developed by the National Oil Spill Detection and Response Agency (NOSDRA).
The country flared approximately 275.4 billion standard cubic feet of gas worth $1 billion (N1.27 trillion at the average exchange rate of N1267/$) between January and December.
Industry experts said the volume of gas blasted can generate megawatts of electricity, enough to power millions of homes in Africa. According to the United States Energy Information Association, one megawatt (MW) of electricity can provide 1,000 households.
The World Bank, in its 2021 electricity report, revealed that more than 85 million Nigerians lack access to electricity. According to the African Development Bank, over 640 million Africans have no access to energy, corresponding to an electricity access rate for African countries at just over 40 percent, the lowest in the world.
Energy security/Regional cooperation
Riverson Oppong, the Chief Executive of the Association of Oil Marketing Companies, and LPG Marketing Companies, lamented the WAGP's limitations, highlighting its failure to extend beyond Ghana's borders.
He stated that failures to get the project up and running are missed opportunities for energy security and regional cooperation, emphasizing the pipeline's diversion to supply European markets in times of need.
Amidst these setbacks, the proposed Nigeria-Morocco Gas Pipeline offers a glimmer of hope for enhanced energy connectivity. Conceived in 2016 as an extension of the WAGP, this ambitious $25 billion project aims to transport gas from Nigeria to coastal West African countries and beyond.
However, its completion timeline stretches to 2046, reflecting the formidable challenges inherent in Nigeria's gas infrastructure development.
Emmanuel identified Nigeria's reliance on imported steel as a key impediment to pipeline execution, exacerbating procurement costs and project timelines.
He urged decisive action to address these structural deficiencies, stressing the imperative of unlocking the sector's vast potential to boost Nigeria's economy and foster regional cooperation.
“The stagnation plaguing Nigeria's gas sector highlights the urgent need for decisive action to surmount entrenched challenges,” analysts said. “As stakeholders advocate for institutional reforms and strategic partnerships to drive progress, the realisation of Nigeria's gas aspirations hinges on proactive measures to navigate the complexities hindering its path to prosperity.”
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