During the Nigeria-Portugal Business and Trade Forum, which held on the sidelines of the state visit to Portugal by Nigeria’s President Muhammadu Buhari, Mele Kyari, head of the state-firm, said Nigeria has sold gas worth $1billion to Portugal generating widespread curiosity about the source in the face of dwindling supply at home.
A review of the recent NNPC submission to the Federal Executive Council (FEC) indicates that more than 130 million British thermal units (btu) of gas was exported from January to May, this year.
Foreign trade statistics from the National Bureau of Statistics puts the value of natural gas exported from Nigeria at ₦655 billion from in the first quarter of 2022. Gas exported from Nigeria is sold as Liquefied Natural Gas through the Nigeria LNG long-term contracts with countries in Europe and Asia including Portugal.
Following the same trend over three quarters in 2022, indicate that Nigeria has indeed sold natural gas valued at over $1billion to Portugal.
The Federal Government, courtesy of its shareholding in the Nigeria Liquefied Natural Gas (NLNG), through the NNPC got 49 percent of the $37.6 billion in dividends paid so far by the NLNG.
According to the NLNG 2020 facts and figures report, it has over the years paid dividends of over $37.6 billion, out of which 49 per cent went to the Federal Government of Nigeria courtesy of its shareholding in the company, through the NNPC.
NLNG Dividend and other related NLNG Payment are being warehoused in NNPC designated payments bank accounts rather than the federation accounts, according to the Nigeria Extractive Industries Transparency Initiative (NEITI), in its most recent 2020 oil and gas report.
NEITI said: “Payments must be transparently accounted for because funds were kept in accounts belonging to Nigerian National Petroleum Company (NNPC) limited.”
It was recommended in the report that, while the fund is paid into the joint account, it be fully reported in the national oil company’s financial statements.
Read also: Nigeria earns over $1bn from gas sale to Portugal in 2022, says Kyari
While Kyari may have made a factual statement regarding gas sales to Portugal, it should not be construed that Nigeria has developed new capacity by bringing on stream new projects to deliver gas to Portugal.
Gas supply under the NLNG long-term contracts have proceeded since the company began operations in 1999. It started with sales contracts with Enel for 3.5 billion bcm/y, Enagás for 1.6 bcm/y, BOTAŞ for 1.2 bcm/y, and Gaz de France for 500 million cu m/year. The feed gas was provided by Shell, Elf Aquitaine and Agip.
The Nigerian government has indicated that it is turning its focus on gas with the declaration of a ‘Decade of gas,’ backed by new policy actions including drafting a gas expansion plan to use more gas domestically, but its inability to liberalise pricing and has stalled investors’ plan to build new projects.
The NLNG is expanding its supply with the planned construction of Train 7, which could create over 12,000 jobs and improve growth by 35 percent from 22 to 30 Metric Tonnes Per Annum (MTPA) of LNG.
However, there is a growing demand for gas in Europe driven by Russia’s war against Ukraine. In 2020, Portugal consumed 212 billion cubic feet (bcf) – the equivalent to 6 billion cubic meters (bcm) – of natural gas, according to data from Statista, a market, and consumer data firm and the country is searching for more supply.
