Despite having the largest proven gas reserves on the continent, Nigeria could find itself in a situation in which gas demand outstrips gas supply by 2030, a McKinsey report has shown.
The future of African oil and gas: Positioning for the energy transition’s report indicated that the disparity would be at least three billion cubic feet (bcf) per day.
Nigeria’s gas reserves grew to 209.5 trillion cubic (tcf) last year, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) reported in January 2022.
A development that didn’t translate to commercial success as the country could not exploit the oil and gas market when its prices surged in most part of 2022 on the back of Russia’s invasion of Ukraine in February.
Oil and gas infrastructures in Nigeria have been maligned with mismanagement, repairs, and vandalism.
Olokola LNG and Brass LNG, two important Liquefied Natural Gas (LNG) projects became stalled when most of their international investors pulled out from the projects.
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These projects could have added 22 million tonnes annually to Nigeria’s capacity.
However, the McKinsey report indicated that this disparity presents a potential opportunity for investment in gas infrastructure such as gas pipelines, gas processing facilities, and coastal LNG regasification to connect currently stranded gas reserves onshore and offshore with domestic industrial, commercial, and power demand centres.
According to the report, certain natural gas investments are consistent with Nigeria’s recently announced commitment to reach net zero by 2060.
“Our analysis indicates that Nigeria’s net-zero 2060 plan will require significant expansion of on-grid electrification.
“In the short term this will come from flexible gas-based power generation to compensate for renewables intermittency until cost-competitive, long-duration energy storage solutions become available,” the report read.
It further showed that expanding on-grid electricity supply via increased gas-powered generation will require investments in gas pipeline and processing infrastructure to move natural gas from its source of supply to gas-powered generation plants.
“Increasing on-grid electrification could also help to displace more carbon-intensive decentralized power sources.”
McKinsey estimated that there are between 40 and 60 gigawatts of installed capacity of diesel and petrol generators in Nigeria, generating approximately 33 metric tons of CO2-equivalent (MTCO2e) each year—12 percent of Nigeria’s total emissions.
