Rising price pushes Q1’22 gas revenue up 64.3% to N119.4bn

FG moves to further expand the gas market.

Rising price pushes Q1’22 gas revenue up 64.3% to N119.4bn

Nigeria's earnings from gas sales went up by 64.32% in the first quarter of 2022 (Q1'22) to #119.4 billion compared to the #72.64 billion recorded in the same period last year.

Latest data from Nigerian National Petroleum Corporation (NNPC), also showed that gas revenue in the first quarter of this year was 17.6 percent higher than the N101.5 billion recorded in the fourth quarter of 2021.

The earnings come majorly from gas export, feedstock to Nigeria LNG Limited and domestic gas sales to Nigerian Gas Company, a subsidiary of NNPC Limited.

The increase in revenue notwithstanding, a research report from ‘Meristem Gas Industry Update’, a study by a Lagos based investment and corporate finance firm, showed that production actually declined in recent months.

The report found that Nigeria LNG export fell by 19.79% in April 2022 to 59.48 thousand metric tonnes from 74.16 thousand MT recorded in January.

The report, however, stated: “Only a fraction of the country’s gas reserves has been tapped. Few players exist in the space owing to the capital-intensive nature required in setting up gas infrastructure, as well as its storage difficulties, making it hard for producers to engage in gas exploration without potential off-takers”.

It further noted: “Other factors such as the growing divestment of oil assets by International Oil Companies (IOCs) and pipeline sabotage has led to production decline.

‘‘For context, about 70 percent of total gas produced in Nigeria is Associated Gas (AG), which refers to natural gas captured when drilling for crude oil. Hence, this highlights the impact of the waning oil activities on gas production.

‘‘Nonetheless, export sales began to rise in February this year, a turnaround from its year-on-year downtrend. NNPC monthly report shows gas export sales in February 2022 more than doubled compared to the same period last year. Surging gas prices in the international market have anchored gas sales given the declining export.

To make up for the limitations in production capacity, the Federal Government has moved to implement projects that would bring its gas closer to the European market.

An example of this is the $13 billion Trans Sahara Gas Pipelines, TSGP, carried out in partnership with Niger Republic and Algeria. The pipeline will originate from the Ajaokuta-Kaduna-Kano, AKK pipeline, in Nigeria through Niger Republic to the Mediterranean coast of Algeria with Chad and Mali also targeted for supplies.

In a similar news, International Oil Companies (IOCs) operating in Nigeria have reiterated that they would be shrinking crude oil production in the coming years in favour of natural gas development.

The companies said while they viewed gas as transition fuel, the shift to cleaner energy is inevitable.

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