Nigeria sits at the echelon of the largest producers and exporters of natural gas in the world with over 209 trillion cubic feet (tcf) of proven gas reserves. For context, the country is ranked 9th in proven reserves and 6th in top natural gas exporting countries globally in 2023.
However, Nigeria, the largest economy in Africa, like many other African countries, is faced with the challenge of energy security and utilisation. Earnings from natural gas exports have been volatile over the years.
According to the National Bureau of Statistics, Nigeria earned N2.85 trillion from the exportation of LNG in 2022 and has earned N2.28 trillion in the first nine months of 2023.
To tackle these issues, former President Muhammadu Buhari officially designated the 2020s as Nigeria’s ‘decade of gas’ in March 2021. This declaration marked a purposeful redirection in the government’s attention, emphasizing the use of gas as the predominant fuel to drive the nation’s industrial aspirations.
In the period, an impressive 50.7 percent of Nigeria’s total gas production was directed to the international market in the form of LNG. This emphasis on exports highlights the dual nature of challenges and opportunities associated with leveraging Nigeria’s abundant gas resources.
According to the Nigerian government, the goal is not only to drive domestic industrial growth but also to establish the country as a key player in the global energy market.
To promote the domestic use of liquefied petroleum gas (LPG), compressed natural gas (CNG), and gas-to-power, the country implemented a series of policies. These measures target the reduction and commercialization of gas flares, as well as the development of industrial gas markets. As part of its energy transition plan, gas plays a crucial role in meeting immediate energy needs.
However, a new report by the International Energy Forum (IEF) and SynMax has shown that Nigeria’s LNG exports are expected to fall on the back of declining domestic production and increased domestic demand.
The Fragile Equilibrium: LNG Trade Dynamics and Market Risks Report revealed the country is faced with a looming four-year decline in LNG exports due to a steady decline in its trade in the past months, threatening earnings of the country and domestic consumption.
On the other hand, despite facing challenges from Western sanctions, including price caps, an embargo on seaborne oil exports, and the closure of the Nord Stream gas pipelines to Europe (which were sabotaged in September 2022), Russia achieved a record high in energy revenues during the specified period.
Analysis of data from Statista, a global data and business intelligence platform, revealed that oil and gas revenue to the federal budget in Russia stood at ₽11.59 trillion, an equivalent of $130 billion, in 2022.
In 2023, the Motherland, through energy giant Gazprom recorded new feet for gas supplies to China through the Power of Siberia pipeline. Russia is increasing its supplies to China to make up for the loss recorded on the back of the various sanctions from Western states and reduced dependence on its energy.
The state-owned energy company stated that the overall volume of gas exports to China through the pipeline reached 22.7 billion cubic meters (bcm) – 801.6 billion cubic feet (bcf), marking an increase of nearly 1.5 times compared to the 15.4 bcm (543.8 bcf) shipped in 2022.
Gazprom made plans to channel ₽526.1 billion ($5.79 billion) into gas infrastructure expansion in Russian regions between 2021–2025, which exceeds the amount of investments made in the previous fifteen years.
In 2022, construction of 177 inter-settlement gas pipelines with a total length of more than 3,300 kilometers was completed. As of the end of 2022, the gas penetration rate in Russia reached 73.1 percent.
Onboarding new production facilities in Yamal and eastern Russia
The Federation of Russia, through Gazprom, approved the Company’s ongoing efforts in the implementation of its major investment projects aimed at providing the Russian population, utility companies, and industrial enterprises with reliable energy supplies in the long term, as well as at the accurate fulfillment of export obligations.
According to the Board of Directors of the Company, the Bovanenkovskoye field of the Yamal gas production center is key to the development of the domestic gas sector in the 21st century.
“Underway is the pre-development of the second key field – Kharasaveyskoye. At present, the construction of the comprehensive gas treatment unit, the booster compressor station, and producing wells is in progress.”
The main development stages of the Bovanenkovskoye field started in 2008 and in the next ten years (2018), the Group commissioned three production sites that are active today with 770 wells, indicating a high level of efficiency.
“The third production facility will increase Bovanenkovo capacity to the target level, or 115 billion cubic metres of gas per year. This number is colossal, without exaggeration. It equals a quarter of Gazprom’s current annual production,” said President Vladimir Putin of the Federation of Russia during the commissioning in 2018.
According to him, The figure is almost half of what Gazprom provides for Russia’s domestic market and almost half of the country’s exports, to both neighbouring and more distant countries. “The scale is impressive.”
In eastern Russia, Gazprom is developing its powerful infrastructure complex that comprises gas production, transmission, and processing facilities.
According to the Company, new gas wells and the final unit for gas pre-treatment (GPTU-4) are about to be launched at the Chayandinskoye field in Yakutia. “Before the end of 2024, the field will reach its full design capacity.”
In addition, Gazprom revealed that the construction of the Amur Gas Processing Plant is underway. “The project is 90.7 percent complete.”
Gazprom Group’s technological solutions
The technological advancement and technical know-how have placed the Group as one of the powerhouses in petroleum products production in the world.
Dmitry Stratov, deputy director general for prospective development, Gazprom Dobycha Nadym, said the use of three-dimensional geological and hydrodynamic modelling for the development of multi-layer deposits has helped with the field’s success stories.
During the tour of the Bovanenkovskoye facility in July 2023, Stratov told Businessday and other African journalists and experts that the Group will and is ready to support African nations with its technology to boost gas exploration, production, and commercialisation in the continent.
Gazprom has made the peninsula a base for highly efficient and safe innovative technologies and technical solutions. Many of them have been developed by leading Russian research institutes and companies specifically for Yamal on Gazprom’s order.
Additional gas grid expansion
In 2022, a large scope of work was performed to expedite gas grid expansion in the localities of the Russian Federation that are already provided with gas.
Gas pipelines were laid up to the boundaries of 502,200 households across the country. According to Gazprom, the investment financing for the additional gas grid expansion activities totalled ₽57.1 billion ($630 million).
Russia and China bolster partnership
Gazprom and the China National Petroleum Corporation (CNPPC) have further cemented their partnership, leading to an all-time high of 22.7 bcm (801.6 bcf) of the volume of gas exported to China coming into 2024.
Gazprom said that both companies are prepared for the increase of these supplies which is planned for 2024 through the design development works for the gas pipeline of the Far Eastern route, including the trans-border section to cross the Ussuri River in the vicinity of the Dalnerechensk town (Russia) and the Hulin city (China).
In addition, both parties are collaborating in R&D and personnel training, leading to the parties signing the intercorporate technical standard “Welded Flexible Steel Pipes for Pumps & Compressors. General Specifications.” agreement to boost knowledge.
Off-grid gas supply
According to Gazprom, the concept behind its participation in gas infrastructure expansion across Russian regions implies a differentiated approach, depending on the size of local gas reserves, the level of their development, and the possibility of using alternative energy, including liquefied and compressed natural gas (LNG and CNG) and liquefied petroleum gas (LPG).
Special attention is given to delivering gas to small localities and population centres remote from gas trunklines, which is particularly important in rural areas.
In 2014, Gazprom implemented its first off-grid gas supply project: the Company built an LNG complex in the Perm Territory consisting of an LNG mini-plant in the Kanyusyata village (Karagaisky District) and three natural gas receiving, storage and regasification stations. The complex has an annual capacity of 19 million cubic meters of gas.
The construction project for six facilities, namely, a small-scale gas liquefaction complex with an hourly capacity of 7 tons and five gas receiving, storage, and regasification stations, is underway in the Tomsk Region.