Nigeria Steps Up LNG Exports to Asia, Expects Demand to Rise

By Therese Robinson

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Published in: Daily Gas Price Index Filed under:

State-owned Nigeria National Petroleum Corp. Ltd. (NNPC) started deliveries of LNG exports to China last month after delivering its first cargo to Japan in June on a delivered ex-ship (DES) basis.

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Nigeria is shifting away from the country’s declining oil revenues and increasing its focus on liquefied natural gas exports, particularly since the decline of Russian exports to Europe has increased global demand for the super-chilled fuel. NNPC plans to ship more LNG cargoes on a DES basis, wherein sellers pay all costs to move cargoes to buyers.

“The DES system, apart from being more financially rewarding, allows NNPC inroads into the downstream segment of the LNG sector and positions it to capture more market share, while building in-house capacity and ensuring that global customers are familiar with the NNPC brand," said Dapo Segun, executive president of NNPC Downstream.

NNPC plans to deliver at least two more LNG cargoes to Asia on a DES basis by November. “Many more orders are expected before the end of year,” said spokesperson Olufemi Soneye.

NNPC holds a 49% stake in the 22 million metric ton/year (mmty) Nigeria LNG (NLNG) facility, and often delivers LNG through NLNG since 2021, trading over 20 cargoes to Europe and Asia on a free-on-board (FOB) basis, wherein the buyer lifts cargoes and is responsible for all costs.

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More than half of Nigeria’s total exports are delivered to Europe. Nigeria exported 13.47 million tons (Mt) last year, down around 10% compared to 14.61 Mt exported in 2022, according to Kpler data.

Nigeria is not considered an Atlantic Basin competitor to U.S. LNG exports to Asia. Nigeria’s exports of the super-chilled fuel to Asia increased to 1.01 Mt in July, the highest level so far this year.

Nigeria’s LNG exports to Asia are forecast to rise to 1.36 Mt for September, according to Kpler. The United States delivered 3.13 Mt to Asia for August, up from 1.36 Mt delivered in September 2022.

Nigeria is estimated to hold more than 200 Tcf of proven natural gas reserves, the largest on the continent.

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Although gas production rates are expected to rise over the next four years, the lack of investment in new gas projects is expected to dent production levels after 2028, leaving NNPC’s plans to increase LNG exports up in the air, according to Global Data.

Corruption, theft, and attacks on the country’s pipeline infrastructure saw NLNG revenue drop for the first time in three years, down nearly 25% to $5.85 billion in 2023 due to a shortage of feed gas and the resulting drop in output.

In office since 2023, President Bola Ahmed Tinubu recently inaugurated two gas processing plants and a pipeline project based on government plans to increase Nigeria’s gas production by more than 25%. Tinubu was recently in Beijing to meet with China’s President Xi Jinping to discuss, among other issues, investment in oil and gas projects.

NNPC recently signed a project development agreement with floating LNG developer Golar LNG Ltd. for a project offshore the Niger Delta.

Nigeria has six liquefactions trains, on Bonny Island. Although a final investment decision has been made for a seventh train to increase capacity to 30 mmty over the next five years, how the feed gas will be sourced is a major issue. The seventh train was expected to be online in 2025.

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Therese Robinson

Therese Robinson started her energy career in London covering international oil and gas markets. She was managing editor-Europe at Platts, director of Standard & Poor’s Credit Ratings division, and managing editor at UK consultancy, Gas Strategies. She also served as business development and crude editor for Argus. As both project director and managing editor, she launched Natural Gas Daily for Interfax Energy Services. She is from New England.