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  • Oil & Gas - News
  • Updated: September 07, 2023

FG Records N3.3 Trillion Gas Revenue Loss In 2022 Over Reduced Exports

FG Records N3.3 Trillion Gas Revenue Loss In 2022 Over Reduc

The Federal Government experienced a substantial setback last year, resulting in the loss of N3.3 trillion in gas revenue, primarily due to a decline in exports attributed to low production, according to data sourced from the Energy Institute, a global authority in the energy sector.

The Energy Institute's most recent report, the "Statistical Review of World Energy," published in June, revealed a significant 16 percent reduction in liquefied natural gas (LNG) exports, amounting to approximately 20 billion cubic meters in the previous year. This decline diminished Nigeria's global LNG export share to less than 4 percent.

Furthermore, the report noted an alarming 11 percent decrease in gas production, with output declining to 40.4 billion cubic meters in 2022, a considerable drop from the annual figures exceeding 49 billion cubic meters recorded in 2019 and 2020, as reported by the Energy Institute.

Considering the average price for LNG in 2022 stood at $388 per thousand cubic meters, the 20-billion-cubic-meter production shortfall resulted in an estimated loss of $7.8 trillion in revenue. The average dollar-to-naira exchange rate in the previous year was N424/$1, contributing to an overall revenue loss of N3.3 trillion attributed to the dwindling LNG exports.

It is noteworthy that Nigeria conducts its gas exports primarily through the Nigeria Liquefied Natural Gas Limited and the West African Gas Pipeline. While the nation boasts a daily gas production of 7.8 billion cubic feet, 2.2 billion cubic feet are reintroduced into the system daily, with the remaining 1.5 billion cubic feet serving domestic and commercial applications.

In stark contrast, global LNG trade achieved record-breaking heights in 2022, averaging 51.7 billion cubic feet per day, marking a remarkable 5 percent increase compared to 2021, as reported by CEDIGAZ.

The United States played a significant role in this growth, witnessing a 16 percent surge in LNG exports in 2022, reaching 10.2 billion cubic feet per day compared to the previous year. This made it the leading LNG exporter in the first half of 2022, although U.S. LNG exports experienced a decline in the latter half due to the temporary shutdown of the Freeport LNG export terminal. Qatar and Australia maintained their positions as the world's top two global LNG exporters.

Despite the challenges, the Minister of State for Gas, Ekperikpe Ekpo, expressed optimism during the Gastech conference in Singapore, asserting that Nigeria possesses substantial natural gas reserves. He highlighted the potential to increase production to over 5 billion cubic feet per day by 2030, aligning with Nigeria's "decade of gas" declaration from 2020 to 2030, with the ambitious goal of achieving 5.5 billion cubic feet of daily production, equivalent to 57 billion cubic meters annually, by 2030.

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