With over 200 trillion cubic feet of untapped gas reserves, Nigeria stands at a crucial juncture in its energy journey. Industry leaders from the oil, gas, and power sectors have offered a frank diagnosis of Nigeria’s lingering energy crisis, charting a practical path forward, DARE OLAWIN reports

Key players and experts in Nigeria’s oil, gas, and power sectors have called for concerted measures and actions that will lead to proper utilisation of the country’s vast gas reserves. According to them, Nigeria’s gas reserves are a critical asset towards achieving the ongoing energy transition that will be affordable and sustainable. They expressed concerns that 200 trillion cubic feet of gas have been under the soil due to the government’s inconsistent policy and unpaid debts.

Speaking at the recent Oriental News Conference held in Lagos themed, ‘Integrating Nigeria’s Gas Potentials into Strategic Energy Transition Initiatives,’ the Manager, Energy Transition NLNG, Temitope Ogedengbe, advised that Nigeria must avoid adopting what he called a ‘copy & paste’ approach to energy transition, insisting that the country must tailor its strategy to reflect local realities, including the urgent need for economic growth, energy security, and national development.

“Our transition must leverage our unique strengths and resources to grow our economy. The energy transition should not be a copy-and-paste exercise. Nigeria must design its own transition plan, since we need economic development, energy security, and to address developmental issues,” he said.

Ogedengbe, while highlighting challenges in gas utilisation, lamented that despite Nigeria’s abundant natural gas resources, a large portion is still being flared or reinjected due to the absence of viable commercial arrangements.

He said, “We’re not taking nearly the amount we should be. We are still failing and reinjecting because there is no commercial arrangement to optimise this.”

He noted that while marginal fields hold potential, they are difficult to produce economically.

“There are marginal fields, which are difficult to produce,” he said, adding that the Nigerian Upstream Petroleum Regulatory Commission’s Gas Flaring Commercialisation Programme is trying to address this. He noted that a significant chunk of Nigeria’s gas is still either exported or flared, while domestic utilisation and value addition remain underdeveloped.

“We are not investing enough, and we are not examining the right approaches,” he added.

Speaking on the global LNG market, Ogedengbe noted that although there is still a market for LNG produced by Nigeria, demand patterns are shifting, particularly in Europe, where buyers now favour lower-carbon LNG options.

He said, “There is still a market for LNG produced in Nigeria, but what is happening is that Europe is asking for lower-carbon LNG. There’s a need to use operational levers to reduce carbon, attract premium markets, and unlock funding opportunities, including through reduced taxes and levies.”

He further stated the NLNG remains central to Nigeria’s gas future, revealing that the company plans to expand its capacity to 30 million tonnes per annum.

In his contribution, a former Power Minister, Prof. Bart Nnaji, stated that the shortage of gas supply and infrastructure deficit have continued to act as disincentives to investment and growth in the power sector. Nnaji said in the next two decades, power generation in the country will be dominated by gas-fired plants. He attributed Nigeria’s persistent gas shortage to inadequate investment in gas infrastructure and called for more support from both the government and the private sector.

Nnaji, who chaired the event, addressed stakeholders from across the oil and gas value chain, including key government officials. He said the country’s gas sector remains underdeveloped due to insufficient investment in extraction, transmission, and transportation.

“The focus should not rest solely on government-led efforts; the private sector must also play a vital role. What we need is for the government to act as a true enabler, offering the necessary support for infrastructure and gas harvesting. It’s baffling that with over 210 trillion cubic feet of gas, we still face local shortages.

“We’re unable to produce sufficient quantities to support operations across the country. Though operations improved this year, they weren’t previously at full capacity. A seventh train is underway, but we need more gas,” Nnaji said.

He said Nigeria’s history of mining and exporting coal before abandoning it reflects a wider pattern of resource neglect. Nnaji said gas-fired plants are critical to Nigeria’s power generation, emphasising the need for a reliable supply to ensure thermal plants operate effectively.

He noted that Geometric Power Ltd, which he chairs, is among the companies generating electricity through thermal sources.

“For effective supply from thermal plants, an adequate and reliable gas supply is vital. While we have hydropower, gas-fired plants remain dominant and will likely stay that way for the next ten to twenty years,” he said.

The former minister acknowledged the role of renewable energy in rural electrification but maintained that Nigeria’s baseload power must continue to come from gas or hydro sources, noting that hydropower, however, comes with limitations that require regional cooperation.

Similarly, the Acting Managing Director and Gas Asset Manager of Neconde Energy Limited, Engr. Chichi Emenike, raised the alarm over the consequences of some policies of the government that have undermined the ongoing energy transition.

According to her, unpaid gas supplies, dollarised operations, and policy inconsistencies are discouraging investment in the sector. Emenike, said Neconde, for instance, has gas that had been produced and supplied to the electricity generation companies and that has not been paid for in almost two years.

“This is a serious conundrum, whereas we have sourced funds from somewhere to produce these gas molecules from our facilities. How am I going to pay back?” she asked.

Emenike further explained that Nigeria’s upstream gas production is highly dollarised, making it costlier than crude oil development and difficult to sustain without a commercially viable framework.

“Don’t forget that the gas production industry is highly dollarised, including the requisite inputs. There is no part of the operation, including the technology, that is produced locally. The bulk of it has to be imported in US dollars. The O&M, well drilling, and accessories to drill a gas well are all dollarised. So, it costs more than what it costs to drill a crude oil well. The handling of a gas well is highly sophisticated, unlike that of crude oil,” she said.

Speaking on systemic issues within the gas-to-power value chain, Emenike said, “Over 500 million standard cubic feet of gas is being transported with the NGIC pipeline. If you multiply this figure by one dollar, you will understand the cost. Whereas so much money went into drilling some of these wells, it costs $35,000, plus or minus, and that is outside other assumptions of fees.”

Commenting on the financing and investment environment, she called for a pragmatic national energy plan that begins with achievable goals, rather than lofty ambitions.

She advised, “Let us start with what is doable; I mean the low-hanging fruit. Let us stop with big numbers. We should tidy up small fields that are struggling to juggle both CAPEX and OPEX. We need to sit down once as a nation to be selfish enough to determine what is needed to take care of Nigeria’s economy alone in the Gulf of Guinea.”

Emenike called for urgent clarity on Nigeria’s position in the energy transition and a realistic approach to funding.

“Where do we sit as Nigerians today on this energy transition plan? Where is the money to run the transition? Presently in Nigeria, it is difficult for a gas investor to determine end-to-end where the funds would be coming from. We need a strategy; we need to be serious. Or else, gas investors would rather take what they should have invested in the Nigerian economy to Mozambique or elsewhere,” she cautioned.

Emenike further warned about the economic risks associated with policy instability: “Gas economics is such that it must be end-to-end. Even before you draw down the first financing, you have tied that investment to a commercial arrangement.

“When you have a business, as much as you think you know, in the case of Nigeria, once you put your leg out in this economy, you will see so many things flood in unexpectedly. Your rate of return goes down the drain due to policy flip-flops and multiplicities of levies and fees.”

She insisted that the sector needs regulatory reforms and an end to what she described as rent-seeking behaviour by government agencies.

“We have to deal with the rent-seeking attitude of our regulators to enable investors to repatriate their investment financing. They should stop flogging investors with all forms of regulations and later charge them with potential incidents of non-conformity, which translates to fines, even for not operating, after they have created the crisis,” she added.

Calling for collaborative efforts, Emenike advocated infrastructure sharing and coordination within the value chain: “We need to leverage infrastructure to unlock the stranded assets across the country. We need to look at how to put together our war chest to achieve a lot for the industry. We need to set the rules of the game.

“Every investor wants to see a clear line of sight. Market forces should be allowed to play out. The government should not create a monopolistic environment that stifles investment. They should allow it to have that flexibility. None of these government officials understand how investors raise capital to finance their projects and the terms of it. Government has no business in business. They should stop the rent-seeking attitude and stop looking for short-term benefits. Quick fixes will not work.

“There is much more to be gained if we have a very selfish Nigerian plan that focuses on Nigerian interests alone. This can service the entire Gulf of Guinea if we are serious. Let us start with the small gas fields.”

The CEO further urged the FG to stop putting benchmarks on gas for power, adding that the market forces should be allowed to dictate the price. She charged the Nigerian government to allow flexibility in the market and encourage alliances among the value chain operators.

In summary, experts warn that without urgent action to address excessive taxation and policy inconsistency, Nigeria’s gas sector will remain trapped in a cycle of underinvestment and stagnation. They stress that investor confidence hinges on clear, stable policies and a regulatory environment that supports, rather than stifles, growth.