A southern European country, Portugal, has unveiled plans to increase its imports of Liquefied Natural Gas (LNG) from Nigeria and the United States. The foreign nation decided to reduce its dependency on Russian supplies, which was affected by sanctions imposed after the Ukraine conflict. As global energy dynamics shift, Portugal seeks to enhance its energy Security by diversifying its supply sources. In 2024, Portugal imported 49,141 gigawatt-hours of natural gas, with nearly 96 percent being LNG. Nigeria accounts for 51 percent of these deliveries, while 40 percent came from the United States and only 4.4 percent from Russia.
However, the ongoing efforts by Portugal to expand its LNG imports from the country and the U.S. are part of a broader European strategy to secure energy independence and reduce vulnerabilities to geopolitical disruptions. Nigeria, Africa’s largest oil producer, stands to gain from the new development. The country is well-positioned to increase its market share as the primary LNG supplier to Portugal in 2024. This development could lead to a surge in foreign exchange earnings, offering a much-needed economic boost, which heavily depends on oil and gas revenues.
The impact of United States energy policies on the local economy.
With Portugal prioritising energy diversification, the local energy sector faces both opportunities and challenges. Nigeria may need to invest in scaling up LNG production and Export Infrastructure to meet the growing demand from international countries. Furthermore, it can reduce reliance on traditional buyers, spreading economic risks more evenly. Despite the opportunities, broader global dynamics, such as U.S. energy policies, pose potential risks. The current U.S. administration’s commitment to increasing domestic oil production could flood the global market, exerting downward pressure on oil prices.
Such developments could jeopardise fiscal stability for a country where oil Revenue accounts for over half of its national budget. Lower oil prices would reduce government revenues, leading to potential budgetary deficits, increased borrowing, and delays in infrastructure projects. Meanwhile, ongoing economic challenges compound the risks. The country’s debt is projected to rise to ₦187 trillion, and a decline in oil prices would exacerbate fiscal instability. Social safety nets could come under strain, pushing more citizens into poverty. Additionally, states reliant on federal allocations might experience more profound financial hardships, widening regional inequalities.
Opportunities for economic growth amid global challenges.
Despite these risks, if the southern country increases its patronage, it will offer a chance to strengthen its economic relationships and position on a global scale. The partnership could mitigate some of the adverse effects of global oil market fluctuations by providing a steady source of income through LNG exports. This development highlights the importance of strategic investments in the local energy infrastructure to meet rising demand and enhance export capabilities. On the other hand, it can still serve as a catalyst for broader economic reforms.
Looking at Portugal’s long partnership with African countries, in the 15th century, Portuguese explorers established Trade routes along Africa’s coasts, dealing in gold, spices, and enslaved people. They colonised territories like Angola, Mozambique, Guinea-Bissau, Cape Verde, and São Tomé and Príncipe. Decolonisation in the mid-20th century led to strained relations during independence struggles but eventually evolved into partnerships. Today, Portugal maintains cultural, economic, and linguistic ties with its former colonies, fostering cooperation through the Community of Portuguese Language Countries (CPLP).
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As Portugal moves to reduce its dependence on Russian gas, Nigeria finds itself at a pivotal moment. To capitalise on this, the federal government must adopt a proactive approach and promote partnerships with international energy firms to accelerate the sector’s growth. Also, clear policies and efficient governance will be needed to attract foreign investment, boost investor confidence, and facilitate sustainable development. It should also prioritise Environmental Sustainability in its energy expansion efforts, aligning with global trends towards cleaner energy solutions.