On a clear night in the Niger Delta, you do not need a map to find the flare stacks. You follow the light. Orange columns rise from the creeks and mangroves, burning day and night, visible from kilometres away, indifferent to the communities sleeping beneath them. Somewhere nearby, a hospital is running on diesel. A school has no evening classes because there is no reliable power after dark. A processing facility that could convert that burning gas into electricity sits idle, its development stalled at the project preparation stage, its financing unresolved, its offtake agreement unsigned.
The gas is there. The demand is there. The money, at least in the aggregate, exists. What does not exist is the system connecting them.
That absence is the argument of this article.
The resource illusion
The energy debate has a persistent and expensive blind spot. It conflates resource ownership with energy security. They are not the same thing, and the gap between them has cost more in lost development than most policy discussions are willing to acknowledge.
Saudi Arabia has oil and electricity. But Saudi Arabia also has decades of deliberate infrastructure investment, vertically integrated state institutions, and a policy environment that treated the conversion chain as a strategic asset, not an afterthought. Venezuela has the world’s largest proven oil reserves and rolling blackouts. The Democratic Republic of Congo has the hydropower potential to electrify the entire African continent and one of the lowest electrification rates in the world. Iraq has been sitting on one of the planet’s richest hydrocarbon endowments and has spent years importing electricity from Iran to keep its lights on.
The pattern is consistent enough to be a rule: resources do not generate electricity. Systems do. And when the systems are absent or underdeveloped, resource abundance produces something closer to a cruel irony than an energy advantage.
Nigeria is the most concentrated and consequential example of this rule in operation.
Nigeria’s gas-to-power paradox
On paper, Nigeria’s energy situation should be impossible. The country holds over 200 trillion cubic feet of proven natural gas reserves, making it one of the most gas-rich nations on earth. It has more gas than it could realistically consume domestically for generations. It has signed climate commitments requiring it to reduce flaring. It has power demand exceeding 30,000 megawatts against a grid that delivers, on its best days, under 5,000. It has gas-fired power plants sitting underutilised because they cannot access reliable gas supply.
In 2024, Nigeria flared an estimated 200 billion cubic feet of gas. The World Bank values the economic loss at approximately USD 1.1 billion annually. That figure does not include the opportunity cost of the electricity that could have been generated, the businesses that could have been powered, or the industrial activity that could not take place because reliable power was unavailable.
What it also does not capture is the institutional cost: the signal sent to every investor, every DFI credit committee, and every infrastructure developer watching from outside. Nigeria is burning capital. Not metaphorically. Literally. Every flare stack is a visible, measurable demonstration that the system between resource and consumer is broken.
The question worth asking is not why Nigeria flares gas. The more useful question is why, given the volumes involved and the economic incentive to capture them, the conversion chain from wellhead to switched-on light bulb remains so persistently incomplete.
The missing middle of gas
The first article in this series introduced the concept of the missing middle in the context of electricity grids: the transmission infrastructure, storage capacity, project preparation pipelines, and transaction structures that sit between generation and reliable power delivery. Nigeria’s gas-to-power crisis reveals that the missing middle has an earlier chapter.
Before gas becomes electricity, it must travel through its own conversion chain. It must be gathered from associated and non-associated fields, often scattered across difficult terrain. It must be processed to commercial specification. It must be transported through pipelines or compressed for distribution. It must reach a power plant with a viable offtake agreement, a bankable financing structure, and an operator capable of sustaining the project through the commercial life of the asset.
Each link in that chain is a potential point of failure. And in Nigeria, most of them break.
The gathering infrastructure that should connect marginal field gas to processing facilities is incomplete. The pipeline network that should move processed gas from the south to power plants in the north and west is inadequate, ageing, and frequently disrupted by operational and security challenges. The commercial agreements between gas producers, aggregators, midstream operators, and power plant developers are often insufficiently bankable to attract DFI or institutional capital. The domestic gas pricing regime has historically suppressed the revenue visibility that investors require before committing long-term capital. The project preparation support that would turn a viable gas-to-power concept into a fully structured, financeable transaction is systematically underresourced.
The result is a system that has gas at one end and demand at the other, with no reliable mechanism to connect them. Developers present projects. Financiers see risks they cannot adequately structure around. Gas keeps burning.
This is not a resource failure. It is a missing middle failure at the most upstream point of the energy delivery chain.
Why the world should pay attention
Nigeria is often treated as a special case, an outlier defined by its scale, its complexity, and the particular dysfunction of its midstream infrastructure. That framing is convenient for those who prefer to keep the lesson safely contained within a developing-world narrative. It is also wrong.
The structural problem Nigeria illustrates at high frequency and high visibility is present, in varying degrees of urgency, across a significant portion of the global energy system. Mozambique has discovered extraordinary natural gas reserves in the Rovuma Basin. The question of whether those reserves will translate into electricity for Mozambican households or predominantly into LNG for export markets is being answered right now by the quality of the midstream infrastructure, the project preparation capacity, and the financing mechanisms that exist between the wellhead and the domestic grid. So far, the answers are not encouraging.
In the United States, the Permian Basin flares gas at volumes that would be considered scandalous in any other industry, primarily because the gathering infrastructure has not kept pace with production. In Australia, one of the world’s largest LNG exporters, domestic gas users have faced shortages because the pipeline and distribution infrastructure serving local demand was underinvested relative to the export chain.
The missing middle of gas is not a developing-world problem. It is an infrastructure prioritisation problem. And in a world betting its climate strategy on natural gas as a transition fuel, the failure to build the systems that convert gas production into delivered power is not a peripheral concern. It is a central risk.
The strategic opportunity
Here is what the framing of failure tends to obscure: the missing middle of gas is also the location of the most significant infrastructure investment opportunity in the energy transition.
Nigeria’s flared gas is not waste in any final sense. It is a stranded asset, capital locked in the wrong form, waiting for the systems that would convert it into economic value. Gas capture projects that intercept associated gas before it reaches the flare stack, compress it, and feed it into power generation or distribution networks are commercially viable in most of the basins where flaring occurs. What they require is not new technology. The technology exists. What they require is gathering infrastructure investment, project aggregation to build the scale that attracts DFI minimum ticket sizes, blended finance structures that price the political and commercial risks that private capital alone cannot absorb, and bankable offtake agreements that give lenders the revenue visibility to underwrite the project.
Carbon markets add a further dimension. Well-designed flare gas reduction projects generate verifiable emission reductions that, under Article 6 of the Paris Agreement and emerging voluntary carbon frameworks, can be monetised. That additional revenue stream changes the project economics and, in some cases, converts a marginal project into a bankable one. The missing middle of gas, properly structured, can be partly financed by the carbon value of the gas it captures.
The African Energy Bank, capitalised at USD 5 billion and launched in Abuja in June 2026, represents institutional recognition that the continent’s energy infrastructure gap requires dedicated financial architecture. The question is whether that architecture will reach down into the project preparation and aggregation layer where the gap is most acute, or whether it will replicate the pattern of ambitious capital commitments that cannot find prepared, bankable projects to finance.
That question will not be answered by technology. It will be answered by the quality of the institutional, financial, and transactional infrastructure that connects gas molecules to electricity consumers.
In Nigeria, gas burns while households sit in the dark. This is not a paradox. It is a systems diagnosis. Every flare stack is a report on the state of the infrastructure, the financing mechanisms, and the institutional capacity that should be converting that gas into power but are not. The resource was never the problem. The missing middle was always the problem.
The energy transition will not be completed by the countries that find the most resources, or even by those that install the most generation capacity. It will be completed by those that build the systems capable of converting what the earth produces into what communities actually need. Gas-to-power is the most compressed and visible version of that challenge.
The flares in the Delta are still burning. What they are illuminating is not a Nigerian failure. It is a global instruction manual for what happens when the middle is left to chance.
Nwafor is founder and lead strategist at De-Lazuli Consult, an advisory practice focused on energy transition, project finance, DFI engagement, and carbon market strategy. His work supports developers, investors, development finance institutions, and public-sector stakeholders in project preparation, transaction structuring, stakeholder engagement, and capital mobilisation. He writes from Lagos and Abuja. [email protected], +2348094561290
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