In a significant development for Nigeria’s energy sector, the state-owned Nigerian National Petroleum Corporation (NNPC) announced a planned investment of $550 million with French energy giant TotalEnergies to develop a new gas processing facility in southern Rivers State. This project, expected to be formally announced this week, aims to address Nigeria’s challenges in harnessing its vast gas reserves and boost both exports and domestic supply.
Details of the Project
The $550 million joint venture between NNPC and TotalEnergies will focus on constructing a gas processing plant and a dedicated pipeline network. The facility will be situated on the Ubeta onshore gas field, co-owned by the partnering companies. Processed gas from this facility will be channeled to the Nigeria Liquefied Natural Gas (NLNG) plant, a consortium involving NNPC, Shell, TotalEnergies, and Italy’s Eni.
Nigeria holds the title for Africa’s largest natural gas reserves, estimated at over 200 trillion cubic feet. However, the country has struggled to fully exploit this resource due to limitations in gas processing infrastructure and financial constraints. A significant portion of the gas produced alongside oil is currently flared, leading to environmental issues and economic losses.
This latest investment is seen as a positive step towards fulfilling President Bola Tinubu’s goal of attracting investment into Nigeria’s energy sector. Analysts believe the project will not only showcase the potential of Nigeria’s gas resources but also demonstrate the government’s commitment to improving the business environment. “The government hopes this project will inspire confidence not just in the quality of Nigeria’s gas reserves, but also in the government’s pledge to make it easier to do business here,” commented Clementine Wallop, director for sub-Saharan Africa at political risk consultancy Horizon Engage.
Impact on Exports and Domestic Supply
The new gas processing facility, upon completion, is expected to generate 350 million standard cubic feet of gas per day alongside 10,000 barrels per day of associated liquids. This significant production increase has the potential to bolster Nigeria’s gas exports. It could position the country to become a supplier to the European market, which is currently seeking alternatives to Russian gas imports in the wake of the Ukraine war.
Furthermore, the project is expected to address the ongoing challenge of supplying gas to Nigeria’s power plants. Currently, insufficient gas supplies hinder the country’s ability to generate enough electricity for the national grid. Increased domestic gas availability from the new facility could lead to more consistent and reliable power generation.
Energy analysts point out that besides the immediate benefits of the project, this investment by NNPC and TotalEnergies could also serve as a catalyst for further development in Nigeria’s gas sector. The project’s success could incentivize other international energy companies to invest in Nigerian gas projects, leading to a more robust and export-oriented gas industry.
This development comes at a time when global energy markets are experiencing significant shifts due to geopolitical factors. With Europe seeking to diversify its gas suppliers, Nigeria has an opportunity to leverage its vast gas reserves and position itself as a key player in the global energy landscape. Moreover, the success of this $550 million investment with TotalEnergies will be closely watched as it could pave the way for a more prominent role for Nigeria in the international gas market.
Source: Reuters
