June 19, 2024

Nigeria’s share of global LNG market falls to 6% due to human-imposed sabotage, lack of investment – Kpler

 

Oredola Adeola

Nigeria’s share of the global Liquified Natural Gas (LNG) export market has fallen to just 6% from 10% due to human-imposed sabotage and theft including a general lack of investment, maintenance, and prolonged flooding periods.

Ana Subasic, a market research analyst at Kpler – global leading provider of intelligence solutions for commodity markets- has revealed in a report by Natural Gas Intelligence and reviewed by EnergyDay.

 

According to the Kpler expert the general lack of investment, maintenance, prolonged flooding periods, and more recently pipeline vandalism in Nigeria, has been at the core of Nigeria’s decline in output seen since 2019.

The report disclosed that the Nigeria LNG (NLNG) six-train facility on Bonny Island has been producing far below capacity since 2022, adding that the trend has largely continued in 2023, as a result of upstream gas supply issues and pipeline vandalism.

 

Subasic said that LPG exports from Nigeria have been “protractedly declining” since NLNG declared a force majeure in October 2022 due to flooding.

 

EnergyDay’s check showed that the NLNG plant at Bonny Island has six processing units (trains) with a total processing capacity of 22 million tonnes per year of LNG and up to 5 million tonnes of natural gas liquids (LPG and condensate).

The Kpler analyst however told NGI that “Nigeria’s LNG exports have been lower, but steady since the beginning of this year.”

He said, “NLNG, a major Atlantic basin supplier since 1999 when the first train came online, delivered 1 million tons (Mt) to the global market at a 53% utilization rate in January.

“The situation seems to be improving, however, as exports bounced back to 1.07 Mt in February, translating to about 63% of its total monthly capacity, after four consecutive months of decline.

 

The Kpler analyst however projected that NLNG’s exports will reach 1.22 Mt in March 2023. He also noted that at the continent’s largest plant, NLNG exports have dropped from a high of 21.33 Mt in 2019 to just 14.61 Mt in 2022.

 

Envisioning a possible market rebound for Nigeria in the global gas market, Kpler projected that the country’s share of the market will increase as production returns this year.

It attributed this to the efforts on the part of exploration companies underway, but cautioned that it may not be at levels seen in 2021.

Kpler’s analyst said, “Overall production from NLNG will continue to underperform, and should issues persist in the future, we expect to see a tighter national balance.”

 

The commodity analyst however noted that Nigeria’s President-elect, Bola Tinubu, – during his campaign trail – did not mention how his government would resolve NLNG supply issues, but instead pledged to lead Nigeria to economic prosperity.

 

Tinubu according to Kpler, also pledged to help meet the European Union’s gas shortfall through the construction of a $10 billion gas pipeline to export volumes from Nigeria via Algeria to Europe.

 

Kpler data revealed that Nigeria was Europe’s fifth largest LNG supplier last year when it exported 8.75 Mt to the continent.  That was down from 9.29 Mt in 2021 before Russia invaded Ukraine and cut off supplies to the continent.

 

Subasic said that NLNG’s train 7 sanctioned in 2019, is less than 30% complete, even as construction is ongoing. He noted that the expansion would boost the facility’s output to 30 mmty.

 

Another two LNG projects, Olokola LNG and Brass LNG, could have added more than 22 mmty to Nigeria’s production capacity. The projects have been stalled for more than a decade and have yet to be sanctioned.

 

The Natural Gas Intelligence review however noted that as Europe looks to replace Russian natural gas with more of the super-chilled, Nigeria, (Africa’s largest LNG exporter) has been unable to increase capacity to meet the ramp in global demand.

 

The report stated that Nigeria is missing out on opportunities in what the International Energy Agency expects to be a tight market until 2026 when new projects come online and begin easing the supply crunch.

 

According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), NLNG’s last train was commissioned in 2007, but the International Gas Union recently noted that the country’s resources could easily support up to 10 trains. Nigeria has proved gas reserves of 208 Tcf.