The managing director of Shell Nigeria Exploration and Production Company Limited, Elohor Aiboni, has projected that Nigeria will witness a gas shortage amounting to about three billion cubic feet per day by 2030. He revealed this while speaking at the 2023 edition of the annual conference of the Nigerian Council of the Society of Petroleum Engineers in Lagos. This projection is despite Nigeria having the largest proven gas reserves in the whole of Africa. By then, demand could be more than supply.
According to Aiboni, who was represented by SNEPCo’s finance manager, Tunde Oduwole, the gas supply shortage would be driven by an estimated increase in population, dwindling infrastructure, security, climate and access to energy. According to Worldometer, the population of Nigeria is about 220 million as of August 2023. This makes the country the largest African country based on population. This figure is estimated to reach 400 million by 2050, doubling the current estimate. So, a projection of shortage of resources is not surprising because even the current population has a lot to contend for.
Aiboni advised the government to improve fiscal terms.
Furthermore, she advised Nigeria and other African countries to continue to improve on fiscal terms, the political climate, energy policies and contractual terms to make them attractive to investors and energy companies. For instance, there has to be a stable political environment in the country for investors to want to invest in the oil and gas industry and, in fact, all sectors of the economy. The current political climate has shown that the people are the most divided and most volatile now.
Aiboni also urged African countries to take deliberate steps to attract foreign direct investments (FDI) to harness their vast gas resources. This is because of the huge amount of capital required for gas reserve development. Unfortunately, issues with sourcing forex in the country have made many companies shut down and move to another country. Foreign airlines, for example, have started charging passengers in dollars in order to cushion the effects of scarce forex. Recently, GlaxoSmithKline has announced that the group will be shutting down its operations in the country. One of the reasons for this is the difficulties in sourcing foreign exchange.
Liberal trade policies and stable environment will solve these problems.
These occurrences will deter many investors from coming into the country. So, the director has urged African countries to establish liberal trade, fiscal policies, and a stable social, political and economic environment to attract investors in the gas sector. She said that while the oil and gas industry in Africa has potential opportunities for FDI, investors would preferentially go to countries with more stable macroeconomic policy environments, low or moderate inflation, stable interest rates, stable or predictable exchange rates, easy access to foreign exchange and minimal capital controls.
Sadly, African countries still maintain strict border controls not only for humans but also for goods. Nigerian former president, Muhammadu Buhari, banned the importation of rice in 2018, for example. Although this was not the first time it was banned, the effects kicked in a year or two later when the prices of rice skyrocketed and a local alternative was promoted. Even the ban did not stop the importation. Instead, it created hoarding and an increase in the price of the product across the country.
Quest to reduce carbon emissions also reduced FDI inflow.
Referring to recently published statistics from the United Nations Conference on Trade and Development, she said there was a decline in FDI in Africa from $80 billion in 2021 to about $45 billion in 2022. According to her, this indicated a worrying gap in investments as developing countries worked to achieve the Sustainable Development Goals by 2030. She said that the inflow of FDI had been impacted by global commitments to reducing greenhouse gas emissions, and the drive by hydrocarbon resource-poor countries to reduce dependence on fossil fuels and accelerate the development of renewable energy.
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