A Review of the Nigerian Energy Industry

Nigeria’s LNG export falls in face of shale gas

NLNG-exportsOscarline Onwuemenyi

16 August 2014, Sweetcrude, Abuja – Nigeria’s exports of liquefied natural gas (LNG) shipment to the United States is on a steep decline on the back of increasing shale gas production, state oil firm Nigerian National Petroleum Corporation (NNPC) said, as it comes under more pressure from rising America’s domestically-produced crude.

“Nigeria LNG share is declining even faster. In 2011, Nigeria exported just 2.3tcf representing one percent of total LNG export to US compared to about 12 percent (95tcf) in 2007,” according to data released by NNPC and obtained by our correspondent in Abuja.

Nigeria, Africa’s top oil producer, exports LNG from its six train, 22 million metric tonnes per year Bonny Plant. The country has plans to raise LNG production from the plant to 30 million mt/year by adding a seventh train.

The NNPC data projects that Nigeria’s LNG exports may shrink further, given a steady climb in shale gas share of total gas supply, from eight percent to 32 percent, and the US becoming a net exporter of natural gas this year.

NNPC said while Nigeria estimates to hold 600tcf of proven shale gas reserves, it however, faces the tough challenge of attracting needed investment to bring the gas to production.
The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke had equally warned that US shale oil and an increase in America’s gas production was already affecting Nigeria’s exports to the United States, a major importer of Nigeria’s oil.

Director-General of Nigeria’s Budget Office, Bright Okogu noted recently Nigeria would be losing $32.9 billion annually to cut in US oil imports.

Nigeria was coming under increasing competitive pressure from US Gulf Coast refiners cutting imports in favor of domestically-produced crude. US purchases of crude fell to a five-year low in the last few months, pushing Nigeria to sixth position from fifth among suppliers to the world’s largest consumer.

“US shale oil and an increase in their gas production is already affecting our exports to the United States. Bear in mind that the United States is one of our major importers in this sector,” the minister said.

Between 2007 to 2013, shale gas share of total gas supply increased from eight percent to 32 percent. Consequently pipeline and LNG import share of total gas supply declined from 16 percent and three percent in 2007 to 12 percent & one percent respectively.

As a result of shale gas production, it is projected that U.S. will become a net exporter of natural gas in the year 2014.

Despite the general decline of LNG export to U.S., Nigeria LNG share is declining even faster. In 2013, Nigeria exported just 2.3 tcf representing one percent of total LNG export to U.S. compared to about 12 percent (95 tcf) in 2007.

On country basis, China has the highest shale gas reserve of 1,275 tcf representing 19.4 percent of global total, followed by U.S. 862 tcf (13.1 percent). Shale oil is expected to contribute significantly to global oil supply, with expected impact on global oil price outlook
North America to significantly narrow oil demand-supply gap due to increase in shale oil production. Middle East and Africa are expected to account for most of the surplus.
Asia Pacific will account for the largest deficit while, Europe will have a slight deficit providing potential markets for Middle East and Africa

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