How 18yrs multiple gas policies sidelined domestic consumers

***Exports grow as coking gas shortages persist
***Stakeholders blame poor policy alignments, seek overhauls
By Udeme Akpan, Energy Editor

Despite more than 200 trillion cubic feet (Tcf) of proven natural gas reserves and nearly two decades of multiple policies aimed at making gas the foundation of Nigeria’s industrial economy, the country continues to export more gas than it sells to the domestic market.

Data from the Nigerian Upstream Petroleum Regulatory Commission, NUPRC, obtained by Financial Vanguard, showed that Nigeria exported 3.83 Tcf of gas between 2022 and 2025, compared with 2.69 Tcf sold domestically, representing a difference of about 1.15 Tcf, or 43 per cent, in favour of exports.

The trend continued in the first eight months of 2026, when the country exported 733.8 billion cubic feet (Bcf), compared with 516.8 Bcf sold domestically.

Cumulatively, Nigeria exported about 4.56 Tcf between 2022 and August 2026, compared with approximately 3.21 Tcf sold domestically, leaving exports about 42 per cent higher than domestic supplies.

The figures have renewed concerns over Nigeria’s ability to translate its huge gas reserves into reliable domestic energy for industries, commercial concerns and households, particularly as shortages continue to affect electricity generation, manufacturing, fertiliser production and other gas-dependent industries as well as homes. The paradox is further highlighted by Nigeria’s continued reliance on imported liquefied petroleum gas, LPG, commonly known as cooking gas, despite its abundant natural gas resources.

Policy trajectories, wobbles

Behind the paradox is a record of 18 years policy run including the National Gas Policy, Petroleum Inddustry Act, PIA, Domestic Gas Delivery Obligation, DGDO, Decade of Gas Initiative, gas infrastructure projects and the proposed Gas Swap Framework.

However, industry stakeholders said the fundamental challenge remains the conversion of gas reserves and production into reliable, affordable and commercially viable supplies for domestic consumers. According to them, the problem is increasingly linked to inadequate processing and transportation infrastructure, pricing, payment security, pipeline vandalism and insufficient investment across the gas value chain.

Speaking to Financial Vanguard, the National President, Oil and Gas Services Providers Association of Nigeria, OGSPAN, Maxi Colman Obasi, said inadequate gas supply was undermining power generation, increasing business costs and constraining industrial growth. “Gas shortages reduce the availability of gas-fired power plants, contributing to lower electricity generation and unreliable supply. Manufacturers and other businesses are forced to rely more on diesel and other alternative energy sources, increasing operating and production costs,” he said.

Obasi said the resulting increase in energy and production costs ultimately fed into the prices of goods and services, while inadequate gas supply could force fertiliser, petrochemical and other manufacturing plants to operate below capacity. “Despite Nigeria’s large gas reserves, inadequate domestic supply means the country is not fully converting its resources into economic growth, jobs and industrial development,” Obasi said. He added that limited gas availability was constraining the development of power, CNG, LPG, fertiliser, petrochemical and other gas-based industries capable of supporting economic diversification.

Nigeria imported 1.94m MT cooking gas in 3 years — NMDPRA

The domestic supply challenge is also reflected in Nigeria’s LPG market. According to the Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA, Nigeria imported about 500,000 metric tonnes (MT) of LPG in 2021 and 800,000 MT in 2022, while total consumption stood at about 800,000 MT and 1.4 million MT respectively. In 2023, imports reportedly accounted for about 47 per cent of national LPG consumption, with industry data putting total consumption at approximately 1.36 million MT and imports at about 639,000 MT. This puts estimated LPG imports over the three-year period at about 1.94 million MT.

An industry expert, who pleaded anonymity, said the central problem was the disconnect between Nigeria’s gas reserves, production and actual delivery to domestic consumers. “The real issue is the gap between gas in the ground, gas produced and gas actually delivered to the domestic market. Until we close that gap, Nigeria will continue to experience the paradox of being a major gas-producing country while some domestic consumers depend on imported products,” he said.

He said inadequate domestic supply forced manufacturers and other gas-dependent businesses to rely on more expensive alternatives or imported supplies, increasing operating costs and reducing competitiveness. He also warned that imported gasbased products paid for in foreign currency could put additional pressure on the country’s foreign exchange market. “Gas exports generate foreign exchange and investment, so the answer is not to discourage exports. The objective should be to increase production sufficiently to meet both export and domestic requirements,” he said. According to him, Nigeria needed investment across the entire gas value chain rather than focusing solely on upstream production. “Producing more gas without adequate processing and pipeline infrastructure will not solve the problem,” he said, stressing the need for infrastructure linking producers to power plants, industries, fertiliser companies, CNG projects and other consumers.

Gas challenge not lack of resources — NALPGAM

However, in an interview with Financial Vanguard, the Executive Secretary/Chief Executive Officer of the Nigerian Association of Liquefied Petroleum Gas Marketers, NALPGAM, Bassey Essien, said Nigeria’s challenge was not a lack of gas resources but the failure to convert those resources into reliable domestic supply. “Gas exports generate foreign exchange, but the domestic market must also be commercially attractive enough to secure adequate supply. The solution is not to stop exports but to make the domestic market competitive enough to attract supply while preserving export earnings,” he said.

According to Essien, Nigeria’s problem was largely one of infrastructure, market structure and commercial incentives. “The Domestic Gas Delivery Obligation, DGDO, requires producers to supply the local market, but regulation alone cannot guarantee physical delivery where gathering, processing, transportation and payment systems are inadequate,” he said.

He said the proposed Gas Swap Framework could help match producers with gas but limited evacuation capacity with operators that had infrastructure but insufficient supply. “This is why the proposed Gas Swap Framework is significant. It could connect producers with available gas but limited evacuation capacity to operators with infrastructure but insufficient supply, improving the movement of gas to domestic consumers,” Essien said.

He noted that the impact of inadequate gas supply extended beyond the petroleum industry, particularly because Nigeria’s electricity generation depended heavily on gas. “Gas is also essential to fertiliser, cement, petrochemicals, steel, methanol, glass, ceramics, food processing and other industries. Greater domestic utilisation can therefore create wider economic value through electricity, manufacturing, employment, taxation and investment,” he said.

On LPG, Essien said abundant natural gas reserves did not automatically guarantee adequate cooking gas supplies because LPG required an efficient chain covering processing, extraction, storage, transportation, terminals, depots and filling plants. “Weakness at any point can result in shortages, higher prices and imports,” he added.

Nigeria needs broader domestic gas, LPG strategy — Experts

Essien called for a broader domestic gas and LPG security strategy that would ensure adequate supplies for power generation, fertiliser production, critical industries and households while maintaining competitive exports. “Nigeria needs a broader Domestic Gas and LPG Security Strategy. The government should ensure adequate gas for power, fertiliser, critical industries and LPG while maintaining competitive exports. Domestic pricing and payment arrangements must also give producers sufficient incentives to supply the local market,” he said.

He called for greater investment in the OB3 pipeline, ELPS expansion, gathering and processing facilities, compression systems, transmission pipelines and LPG storage and distribution infrastructure. “More associated gas should also be commercially recovered from streams that are currently flared, reinjected, stranded or under-processed,” he added.

According to him, the Decade of Gas should be treated as a national gas utilisation programme, with LPG as an important component. “Expanding access to affordable LPG could reduce dependence on biomass and kerosene while supporting households, businesses, jobs and environmental goals,” Essien said. He also called for a shift in how Nigeria measures the performance of its gas sector. “The key question should be how much economic value is created from every molecule produced. Exports generate foreign exchange, but domestic utilisation can simultaneously support power generation, industrialisation, employment and downstream investment,” he said.

The Lead Consultant for Industry and Private Sector Development at the ECOWAS Commission, Prof. Ken Ife, identified payment challenges, pipeline vandalism, infrastructure deficiencies and inadequate investment as major constraints to domestic gas supply. “When GenCos owe gas producers huge sums and prefer to settle in naira, as required under the PIA, including Domestic Gas Obligations, DGO/DCO, while pipeline vandalism continues to disrupt supplies, gas producers have very little room to manoeuvre,” Ife told Financial Vanguard.

He said the situation was a major disincentive to domestic gas sales because producers required predictable and uninterrupted revenues to service loans, purchase imported materials and spare parts and meet foreign obligations. “Like crude oil, gas is priced in US dollars based on international benchmarks. But the misalignment across the gas-to-power value chain is chaotic,” he said.

Ife also cited poor transportation, transmission and storage infrastructure, high gas gathering and processing costs and pipeline vandalism as major obstacles to reliable domestic supplies. He urged the Federal Government to increase domestic borrowing to clear outstanding obligations and inject liquidity into the gas supply chain, while strengthening pipeline and physical security and providing incentives for investment in upstream gas gathering and marginal fields.

Ife added: “Nigeria’s gas challenge is no longer simply about how much gas the country has in the ground. It is about how quickly it can turn those reserves into reliable, commercially viable supplies for the domestic economy while sustaining the export revenues needed to finance further investment.