Nigeria, Africa’s biggest economy, lost its title as the continent’s leading exporter of Liquefied Natural Gas (LNG) to Algeria in January as the country’s export declined. A data flow study from Refinitiv Eikon, one of the world’s major sources of real-time data, indicated that Nigeria’s LNG exports decreased over the past month as Algeria overtook Nigeria to become Africa’s top LNG producer for the very first time on a monthly basis. This occurred despite high spot markets for the product.
Refinitiv Eikon said that Algeria exported about 1.1 million tonnes of LNG in January, whereas Nigeria only exported about 1 million tonnes, a reduction of 35 percent year over year. Olumide Ajayi, a senior LNG Analyst at the London Stock Exchange Group, explained that the significant drop in feed gas supply to Nigeria’s NLNG project at Bonny Island is due to the fact that a large portion of the gas used in the facility is associated gas, as a result of the nation’s oil production falls due to upstream problems and pipeline vandalism.
Russian invasion and other factors also contributed to the gas surge.
The Nigeria LNG (NLNG) project has the potential to export up to 1.8 million tonnes per month. In the past two years, LNG spot prices dropped to less than $2/MMBtu; thus, Ajayi cautions that the current opening of opportunity to benefit from high spot LNG prices may not last forever. Outside Nigeria’s domestic difficulties, analysts say that high prices are driving the search for long-term partnerships because the global LNG market is not likely to recover from last year’s disruption for several more years.
As a result of Russia’s attack on Ukraine, the price of gas surged, and Europe purchased unprecedented quantities of liquefied natural gas (LNG). The price of Asian spot LNG has dropped by over 70% from its record of $18.50 per million British thermal units (MMBtu), which is still quite high compared to its prior single-digit pricing, prompting buyers to prefer long-term deals to escape the spot market’s instability. This sector has just realized that spot purchases cannot sustain a business over the long run. According to CNBC, CEO of India’s Petronet LNG, Akshay Kumar Singh said that the buyer needed long-term contracts, as well as a balance of shorter and longer-term deals.
Long-term contracts account for over 70% of the world LNG market.
On the gas spot market, large physical shipments or parcels are traded in one-time trades, with delivery occurring within a short period of time. In contrast, long-term contracts often bind the purchase to occur at an agreed price, with additional financing arrangements for projects with significant capital expenditures and extended payback periods. Even though long-term contracts account for over 70% of the world LNG market, which includes Nigeria’s, spot and short-term contracts makeup about 45%-50% of the market in Europe, and prices are more negotiable in these cases. Kumar affirmed that the country has benefited from both long-term contracts and the rise in domestic (gas) production throughout this crisis.
Also, a study by the Independent Commodity Intelligence Services (ICIS) states that Nigeria, Africa’s largest LNG exporter, anticipates shipping 16.2 million tonnes of the commodity this year. ICIS reports that after periods of servicing, weather-related interruptions, and vandalism to pipelines feeding Bonny, Nigeria’s LNG shipments drastically decreased in 2022, decreasing 15% compared to 2021. According to the analysis, Nigerian exports are projected to increase marginally but lower than the 7.1 million tonnes shipped in 2021.
35% boost in the facility output expected from the Train 7 project.
Moreover, the NLNG reported in August that work on Train 7, which was about 26% completed, would boost the facility’s output by 35% from 22 million to 30 million tonnes per year. The Nigerian government has also given its approval to a memorandum of understanding for the building of the 5,660 km (3,517 miles) long Nigeria-Morocco Pipeline Project between the Nigerian National Petroleum Company Limited and the Economic Community of West African States.
Related Link
NLNG: Website
Snopes.com
Algeria becomes Africa’s top gas exporter. – LNG export decrease in the past months made Nigeria lose its status to Algeria. – Express your point of view.
Truthfully, I’m not surprised Algeria is ahead of Nigeria. Solutions should be provided to the causes of the problems.I believe if the gov’t addresses situations, Nigeria would go to the top again.
Algeria becomes Africa’s top gas exporter. Congratulations for them since they are working hard to be the best
The quantity of LNG that was sent out of Nigeria fell during the last month, which coincided with Algeria’s rise to the position of leading LNG producer in Africa on a monthly basis for the very first time.
Nigeria, the country with the largest economy on the African continent, was dethroned by Algeria in January as the major exporter of liquefied natural gas (LNG) on the continent. This was due to Nigeria’s declining exports.
The substantial proportion of related gas consumed in the facility is to blame for the drastic reduction in feed gas supply to Nigeria’s NLNG project at Bonny Island.
We know that as a consequence of the decline in oil output across the country as a consequence of problems upstream and damage to pipelines.
During the course of this crisis, the country has reaped the benefits of both long-term contracts and an increase in the volume of domestic gas production.
Due to the fact that the global LNG market is not going to recover from the disruption that occurred in the previous year for several more years, high prices are leading people to look for long-term partnerships.
On the gas spot market, substantial physical shipments or parcels are traded in one-time exchanges, and delivery takes place within a short amount of time after the trade is completed.
This is a nice development for Algeria. It shows they are doing well in the gas sector. Nigeria should also take after them
It show we are lacking and not doing enough work about LNG every obstacle should be deal with to afford any issue from occur we should so the necessary thing to get back to the top
This is mainly due to Nigeria’s deteriorated economy which have seen majority of crude products down in recent time. Nigeria needs to focus more developing.
It is very unfortunate that the country continue to drop and loosing lots of money to other Africa countries,be it agriculture and natural resources and this is due to bad leadership and corruption.
The problem confronting Nigeria are the limiting factors that resulted in the low production.The nation’s oil production falls due to upstream problems and pipeline vandalism.I have the hope that Nigeria will soon surpass Algeria in the production of liquefied gas and exportation.
It is unfortunate that Algeria has become Africa’s top gas exporter. I believe it is temporary. Nigeria’s nightmare will soon be over and they will bounce back to normal production.
Large quantities of gas are traded in one-off trades on the spot market, with delivery occurring quickly after the deal is made.
For Algeria, this is good news. This demonstrates their success in the gas industry. The same should be done in Nigeria.
It doesn’t shock me that Algeria is placing higher than Nigeria. The root of the issues must be addressed in order to deliver effective solutions. If the government takes care of the problems, I think Nigeria may rise to the top once more.
Gas prices increased as a result of Russia’s invasion on Ukraine, and Europe bought record amounts of liquefied natural gas (LNG).
This is primarily because of Nigeria’s failing economy, which has recently seen a decline in the price of most oil goods. Nigeria should prioritize its development more.