Nigeria's energy export markets shift in response to global trends


Long one of the top two crude exporters in Africa, Nigeria’s gas output has also served as a source of increasing revenue. However, changes are afoot in both segments as a result of the shifting global crude trade patterns and the rising levels of domestic consumption, which may in turn have long-term implications for the country.


Global crude markets are in a transitional phase as traditional producers grapple with US shale companies for global market share. The US currently imports less than it once did, and Nigerian crude must flow to different markets as a result.

However, the dynamic is different for natural gas. Nigeria is the world’s fourth-largest supplier of liquefied natural gas (LNG), and the decision to expand capacity is a difficult one. The long-awaited approvals for new LNG trains were tied up in a legislative controversy as of spring 2017.

The fall in crude prices since 2014 has presented twin challenges for Nigeria – it receives less for its main output, and it lost a key customer. The country’s benchmark crudes are similar in their physical properties to much of the oil extracted from various US shale beds. Previously, the US typically bought around 10% of Nigerian crude until its own shale production ramped up. Sales to the country fell to less than 2% of exports in 2014 and 2015. As a result, Nigeria has pivoted to Europe and Asia for sales, taking advantage of the EU embargo on Iranian crude and supply disruptions in Libya.

However, these markets may not be a sustainable option for the long term. Europe remains the most important region for Nigerian crude; exports stood at roughly 800,000 barrels per day (bpd) of exports in 2015, down from 900,000 bpd in 2014. Meanwhile, exports to Asia and Oceania were just short of 600,000 bpd, with the US and other countries each taking about 300,000. India, at 20% of the overall sales, was Nigeria’s largest single-country customer.

Gas Development

Gas is being affected in an equally significant way, although here the challenge is not an external competitor, but rather, a domestic need. Nigeria is currently a major exporter of gas through Nigeria LNG (NLNG), the country’s only LNG facility. Its six production trains exported 18.6m tonnes in 2015, some 7.2% of world market share. The facility is a joint venture of the Nigerian National Petroleum Corporation, Shell, ENI and Total, and was created through the NLNG Act of 2004.

A seventh and eighth train at NLNG – which had been considered previously – could boost capacity from 22m tonnes per year to over 30m. That would, however, require a significant investment – estimated at some $25bn – and with a recent proposed amendment on the act, adding a 3% levy on NLNG revenues to help fund development in the Niger Delta, the likelihood of an expansion is slim. An NLNG spokesman told local media in June 2017 that if new taxes on its output were approved, the consortium would not invest in new capacity.

In addition, Nigeria has committed to gas exports through the West African Gas Pipeline (WAGP), but so far it has failed to export the volumes it initially agreed to, which has consequently caused complications in client countries such as Ghana.

The drop in gas supply for the WAGP and the broader transition away from export infrastructure is not surprising. Given the country’s low power supply, there is an increasing need to shift gas feedstock to domestic power plants (see Utilities chapter). However, cash flow in the power sector has historically been erratic, which has in turn led to non-payment for gas providers. New trunk pipelines under way may help address the issue. Similarly, the rise in captive independent power plants, which would allow gas providers to negotiate directly with industrial consumers, could also provide a greater measure of stability in the domestic gas market.


You have reached the limit of premium articles you can view for free. 

Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.

If you have already purchased this Report or have a website subscription, please login to continue.

The Report: Nigeria 2017

Energy chapter from The Report: Nigeria 2017

Cover of The Report: Nigeria 2017

The Report

This article is from the Energy chapter of The Report: Nigeria 2017. Explore other chapters from this report.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart