Nigeria lags as Japan lead in global LNG regasification capacity

Japan now has the world’s highest Liquefied Natural Gas (LNG) regasification capacity of 9.6 trillion cubic feet (tcf), but Nigeria with the world’s ninth largest proven gas reserve cannot convert liquid gas back to its natural state indicating poor strategy for domestic gas usage.

GlobalData, a data and analytics company based in the United States who carried out the research also said that South Korea and China come next with 4.9 tcf and 3.2 tcf capacity respectively.

This questions Nigeria’s strategy to liquefy its gas mainly for exports thus limiting usage locally as fuel for vehicles, shipping and rail, agriculture and power. Analysts say a better strategy would be to export and invest in regasification terminal to take advantage of cheap gas prices in an already glutted LNG market.

Olufola Wusu, oil and gas lawyer who helped review Nigeria’s new gas policy said that Nigeria at the moment does not have one regasifacation unit which is part of the problem with utilisation of gas domestically, there are so many uses of gas but Nigeria is not benefiting from it.

Traditionally, Nigeria’s gas strategy, with reference to LNG was primarily geared towards exports, however, changing LNG market is creating a need for a new strategy, says Wusu.

Wusu further said that Nigeria’s domestic gas market is experiencing severe shortage with power plants often going offline due to gas supply constraints. At present, about 2,000 megawatts capacity lie idle at 12 power plants.

“The LNG market seems to be experiencing a glut, while the domestic gas market is still suffering an energy deficit largely due to an absence of critical gas infrastructure that no one wants to pay for. These pending gas projects may need to tweak their strategy and think of innovative ways to supply LNG to the domestic market,” said Wusu.

Nigeria currently produces 8.0 bcf/ d of natural gas but 38 percent of this, the equivalent of 3.05 bcf/d is exported in the form of LNG by the NLNG. Thirty six percent or 2.9 bcf/d serves as re-injection fuel and for other operational uses. Sixteen percent or 1.3 bcf/d of gas produced is dedicated for domestic consumption in power and industries and 0.75 bcf/d or 10 percent is flared.

The chief use for gas in the domestic market is for power generation as industries while needing gas, do not have sufficient capacity to take the volumes required to keep the market liquid. However, the power sector which has capacity is cash challenged and indebted to gas producers.

Operators also decry the gas pricing template that compels industries to buy the commodity at a fixed price of $7.30/mmbtu while gas sells in the international market at $3.30/mmbtu. Local gas producers are forced to meet a DGSO to power plants at less $3/mmbtu and are being owed billions, before they can sell to other parties.

GlobalData analysis shows that Japan accounts for 28.3 percent of the total global LNG regasification capacity with 35 active LNG regasification terminals. South Korea contributed about 14.5 percent of the global LNG regasification capacity in 2018 and has six active terminals. South Korea is expected to add a capacity of 17.1 tcf from a planned terminal during the period, 2018 to 2021.

China on the other hand has 3.2 tcf regasification capacity, which is 9.2 percent of the global LNG capacity in 2018 and has 16 active terminals. China is expected to add a capacity of 2.1 tcf from 17 planned terminals during 2018 to 2021

Spain is the fourth largest contributor to the global LNG regasification capacity with 2.2 tcf. Next is the UK which contributes about 2tcf to the global LNG regasification capacity in 2018, which is about 6 percent of the global LNG regasification capacity. France and India contribute about 1.7 tcf each, which is about 5 percent of the global LNG regasification capacity.

ISAAC ANYAOGU