Nigeria’s LNG Crossroads: Navigating Challenges and Charting a Sustainable Future

Nigeria, Africa’s largest oil producer and a key exporter of liquefied natural gas (LNG), is facing a critical moment. Once a rising star in global LNG markets, Nigeria is now grappling with a combination of aging infrastructure, fluctuating production, underinvestment, and mounting competition from emerging LNG players. The stakes are high: LNG represents a cornerstone of the country’s energy strategy and a major source of foreign exchange revenue.

As global demand for natural gas continues to grow—especially in Asia and Europe—Nigeria must decide whether it will reinvest, reform, and rise again, or fall further behind in a rapidly evolving energy market.

The Role of LNG in Nigeria’s Energy Economy

Nigeria's LNG sector, primarily driven by Nigeria LNG Limited (NLNG), accounts for roughly 10% of global LNG supply. The NLNG project is a joint venture between the Nigerian National Petroleum Corporation (NNPC), Shell, TotalEnergies, and Eni. The company’s Bonny Island plant in Rivers State has a production capacity of 22 million metric tons per annum (mtpa).

LNG is vital to Nigeria’s economy. It brings in billions of dollars annually in export revenue, supports domestic gas utilization, and plays a role in mitigating gas flaring by monetizing associated gas. It’s also seen as a transitional fuel that supports cleaner energy goals.

Current Struggles: Infrastructure, Funding, and Production

Despite its early lead in the African LNG market, Nigeria now faces significant headwinds:

1. Aging Infrastructure

The Bonny Island LNG plant, commissioned in the 1990s, is aging. Maintenance challenges, downtime, and operational inefficiencies have reduced output. Limited upgrades and the slow pace of expansion projects have put the plant at a disadvantage compared to newer, more efficient facilities in the U.S., Qatar, and Australia.

2. Delayed Expansion: Train 7

NLNG’s long-awaited Train 7 expansion—meant to add 8 mtpa to capacity—is years behind schedule. Though construction finally began in 2021, completion has been delayed by logistical issues, inflation, security risks in the Niger Delta, and contractor disputes. Train 7 was initially targeted for 2024 but now faces likely delays into 2026 or later.

3. Gas Feedstock Shortages

A major issue is the inconsistent supply of feed gas to the LNG facility. Many upstream gas projects have stalled due to vandalism, oil theft, underinvestment, and regulatory uncertainty. Nigeria flares around 300 million cubic feet of gas daily—gas that could otherwise be processed and exported.

4. Security Risks and Sabotage

Persistent insecurity in the Niger Delta, including pipeline sabotage, oil theft, and militancy, disrupts both gas supply and investor confidence. These risks add operational costs and make project planning more difficult.

5. Regulatory Bottlenecks

While the Petroleum Industry Act (PIA), passed in 2021, was meant to streamline regulations and encourage investment, implementation has been sluggish. Investors cite bureaucratic delays, unclear licensing terms, and inconsistent enforcement as obstacles.

Global Competition and Market Pressures

Nigeria’s LNG sector is also feeling the squeeze from global competition:

• Qatar and the U.S. are rapidly expanding LNG capacity, offering cheaper and more reliable supply options.

• Mozambique, another African LNG player, is becoming a serious contender with its offshore reserves and foreign investment, particularly from TotalEnergies.

• Renewable energy is gaining ground, and long-term demand for gas is uncertain in some markets due to decarbonization policies.

  
  

This increased competition means that Nigeria can no longer rely on its legacy infrastructure and geographic position alone—it must innovate and invest.

Government Response and Strategic Reforms

To address these challenges, the Nigerian government and NNPC have unveiled several initiatives:

1. Revamping Gas Infrastructure

Plans are underway to rehabilitate existing infrastructure and build new gas processing plants. The government has earmarked funds for gas pipeline networks, including the much-discussed Ajaokuta–Kaduna–Kano (AKK) pipeline to boost domestic distribution.

2. Decade of Gas Initiative

The Buhari administration launched the “Decade of Gas” campaign to promote gas as the fuel of choice. This includes:

• Encouraging investment in gas-to-power projects

• Expanding LNG usage for domestic transport (autogas)

• Supporting small-scale LNG plants for local consumption

  
  

3. Gas Export and Regional Integration

Nigeria is exploring new export routes and regional gas pipelines to neighbors like Niger, Ghana, and Morocco. The Trans-Saharan Gas Pipeline and the Nigeria-Morocco pipeline are part of this vision, although progress remains slow due to geopolitical and financial constraints.

4. Public-Private Partnerships

There’s a growing emphasis on engaging the private sector. NLNG itself is a model of successful public-private collaboration. The government hopes to replicate this model in other parts of the gas value chain, particularly midstream and downstream.

Opportunities Ahead

Despite the challenges, Nigeria has immense untapped potential:

• Proven gas reserves of over 200 trillion cubic feet, the largest in Africa

• Growing demand in Europe, especially since the Russia-Ukraine conflict reshaped energy flows

• Strategic location for Atlantic Basin and intercontinental trade

  
  

If Train 7 and subsequent expansions are completed, Nigeria could reclaim its top-tier status in global LNG markets.

Furthermore, integrating small-scale LNG projects and decentralized systems can help serve both export and domestic markets, improving energy access across Nigeria.

Social and Environmental Considerations

While LNG is cleaner than oil and coal, Nigeria must manage the environmental impact of gas projects. Methane emissions, land use issues, and flaring remain concerns. Transparency and adherence to ESG (environmental, social, governance) standards are now prerequisites for major investors.

Moreover, the local communities in the Niger Delta must see tangible benefits from gas development. Community engagement, local hiring, and environmental safeguards are essential to maintaining social license.

Conclusion: The Clock Is Ticking

Nigeria’s LNG sector stands at a crossroads. The global energy transition and rising competition have raised the stakes. Yet the country holds all the ingredients for a strong rebound: vast gas reserves, established infrastructure, and strategic location.

To regain momentum, Nigeria must move beyond rhetoric and execute its plans—reliably and transparently. The successful completion of Train 7, full enforcement of the PIA, and revitalization of gas feedstock supply are non-negotiables.

Failure to act decisively could see Nigeria permanently lose ground to more agile competitors. But if the government, NNPC, and private partners deliver on reform and reinvestment, Nigeria could once again become a powerhouse in the LNG world—fueling both its economy and a more energy-secure future for Africa and beyond.