New Report Says Nigeria’s Liquefied Natural Gas Expansion Drive Faces Severe Future Risks

Nigeria’s ambitious plans to expand its Liquefied Natural Gas (LNG) projects, including the notable Train-7 initiative, face significant risks, according to a new report by the International Institute for Sustainable Development (IISD).

The study, titled “A Balancing Act: Considerations for the Expansion of Liquefied Natural Gas Projects in Nigeria,” authored by Bathandwa Vazi and Richard Bridle, cautions that while replacing oil revenues with LNG exports may appear economically viable, the strategy is fraught with challenges.

The report highlights that Nigerian LNG projects might struggle to remain competitive in the global market post-2030 due to higher production costs. The weighted average breakeven gas price, a critical metric for economic viability, suggests that Nigeria’s LNG projects are at risk of becoming stranded assets if global gas prices fall below domestic breakeven levels. This scenario could lead to reduced profitability, deter investment, and undermine the competitiveness of Nigerian LNG in a crowded market dominated by more cost-efficient producers like Qatar, Australia, and the United States.

Additionally, the report indicates the potential impact of new EU methane import performance standards, which could affect Nigerian LNG exports based on emission levels. The IISD study warns that investments in LNG may not yield the anticipated revenues due to a forecasted global gas glut and decreasing demand as Europe diversifies its energy mix. The report stresses the necessity for Nigeria to re-evaluate its economic model, considering the projected decline in global fossil fuel demand driven by net-zero commitments and increased competition from other LNG producers.

Source: This Day