As we look back on the last decade, it is evident that the energy landscape has undergone a significant transformation, with natural gas increasingly becoming the fuel of choice for many countries including Egypt, Mozambique, Tanzania, Ghana, Senegal, South Africa etc. In Nigeria, the shift towards natural gas has recorded more push with the Federal Government’s Decade of Gas initiative, which was launched with the aim of boosting the country’s gas utilisation and driving economic growth. 

What is the impact of natural gas displacing oil in Nigeria’s energy market and what are the key factors that have contributed to this shift?

OVERVIEW 

Global projections estimate that oil demand will reach its peak in a few years, after which oil will become very scarce and expensive as crude oil extraction grows economically unviable. According to gisreportsonline.com, at current consumption levels, we can expect oil production to begin to plateau by 2040.  

With supply gaps set to grow wider as oil production depletes, more countries are making the shift to alternative fuels like natural gas to meet the growing energy demand. In Nigeria, natural gas is abundant, affordable and a far cleaner fossil fuel, making it an excellent and accessible replacement for the traditional dirty fuels. The Federal Government interventions such as the Decade of Gas initiative continue to encourage the expansion of the domestic natural gas market. At the same time, manufacturers and industries seek a quicker transition considering increasingly unstable diesel and oil prices. 

We anticipate that within the next decade, natural gas will largely force out oil demand in major markets across the world and Africa. But how would this shift affect industries and sectors? And how ready is the nation’s energy sector for the overhaul?

According to the Nigerian National Bureau of Statistics, the production of natural gas in Nigeria has increased steadily over the past decade. In 2011, Nigeria produced 155,632 million cubic feet (MCF) of natural gas and 208,812 MCF in 2020, representing an increase of over 34%. In terms of consumption, the use of natural gas as a source of energy in Nigeria has also been on the rise with natural gas accounting for 25% of total energy consumption in 2011, while in 2020, it accounted for 39%. In the same period, the use of oil as a source of energy declined from 52% to 38% increasing our energy security. This is a huge improvement with Nigeria now able to meet a significant portion of its energy needs from this cleaner and more efficient fuel source.  

HOW AXXELA IS LAYING THE GROUNDWORK 
As a pioneer natural gas infrastructure developer in Nigeria’s private sector, Axxela is not just waiting for this market shift to occur, we’re making it happen. Over the past two decades, our business has been focused on ensuring Nigeria is market-ready for the mass adoption of natural gas. 

Infrastructure Development 
Axxela has invested over $500 million in gas infrastructure development to make natural gas easily accessible to industrial and commercial consumers across Nigeria. Through our subsidiaries, we have completed over 360km of pipeline network contributing to the country’s existing gas grid.

Natural Gas Advocacy 
Our business continues to make a strong case for natural gas as an alternative fuel which offers far better advantages for the environment while providing sufficient energy for industrial demands. Currently, we are supporting over 200 industrial customers as they make the switch from traditional dirty fossil fuels.  

Bridging the Gap 
Our small-scale LNG and virtual pipeline projects are forerunners that will further support the early adoption of natural gas across Nigeria especially in regions where there is a dearth of gas distribution infrastructure. Our efforts to bridge this distribution gap ensures that no region in the country is left behind in this industrial shift. 

Environmental impact  
The shift towards natural gas has also had a positive impact on the environment, lowering greenhouse gas emissions to combat climate change and promoting improved air quality. Other initiatives are not left out as the Nigerian Gas Flare Commercialization Program which aims to reduce gas flaring and promote the use of natural gas in power generation and other industries.

As we elevate the conversation on the increasing need for energy, natural gas will continue to play a pivotal role as a viable alternative that will contribute to building a sustainable energy future for Nigeria.