Nigeria toughens stance on LNG exports as power shortages worsen
Nigerian energy minister Emmanuel Odusina warned international oil and gas companies working in the country to prioritise domestic over overseas gas supply or face suspension of current LNG export projects, state energy company NNPC said in a statement on Thursday.
The international energy firms, including oil and gas majors Shell and Total, must present to the government a plan to alleviate critical gas shortages in the country by the end of October, the statement said. Nigeria, the most populous country in Africa, is facing severe power shortages that are understood to have curtailed its economic growth.
“The federal government’s policy and regulations on gas supply to the domestic market are not up for discussion or negotiations any more,” said Odusina in a statement by the state-operated Nigerian National Petroleum Corporation (NNPC).
According to the government directive, the companies must set aside between 280 and 350 million cubic feet of gas by the end of the year for domestic use.
Despite having 180 trillion cubic feet of natural gas under its soil, Nigeria is unable to generate power to its population of over 140 million people. The country’s installed power generation capacity is below 1,000 MW - the equivalent of one medium-sized European nuclear reactor - largely due to a lack of maintenance in the existing infrastructure and investment in new power generation. Parts of country are understood to be left without electricity for weeks in what has been a series of constant and persistent blackouts.
“The country needs power,” Nigeria’s energy minister Odusina said. “We must prioritise domestic gas supply over any LNG project.”
Immediate effect unclear
The statement did not clarify whether Nigeria’s existing LNG plant on Bonny Island in which NNPC has a 49% stake, would be affected.
Analysts said any export ban was more likely to halt progress on new plants in development including Brass LNG (in which NNPC has a 49% stake and with Total, Eni and ConocoPhillips each having 17% stakes) and OK LNG (a joint venture of Chevron, Shell, British Gas and NNPC).
“The minister warned that if by the end of October 2008 there is no evidence of cooperation, the government will have no choice but to consider further measures it deems necessary, including, but not limited to, putting a stop or suspension to all LNG projects targeting export of gas,” the statement said.
One LNG consultant told GLM, “From a political point of view it is understandable that it would be difficult to explain to people you are exporting LNG to keep the lights on in the US and in Spain, when they do not have power at home.”
Nigeria’s gas master plan, announced earlier this year, supports the development of gas utilisation schemes which split gas project output between domestic and export needs.
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