Nigeria’s gas production down by 4.2bn cubic metres in 2013

Nigeria’s natural gas production levels dropped by 9.8 percent or 4.2 billion cubic metres in 2013, from the 42.6 billion cubic metres marketed in 2012, according to OPEC’s 2014 Annual Statistical Bulletin.

Despite ranking behind Nigeria on the gas reserves list, Algeria and Egypt, with marketed production of 79.6 billion and 57.6 billion cubic metres of natural gas, respectively, out-sold Nigeria. In an analysis of 10 African gas producing nations, Nigeria ranked third in terms of 2013 marketed output with 38.4 billion standard cubic metres. 

Algeria’s marketed output of 79.6 billion cubic metres was twice Nigeria’s. Algeria is the leading natural gas producer in Africa, the second-largest natural gas supplier to Europe, and is estimated to hold the third-largest amount of shale gas resources in the world, according to the United States Energy Information Administration (EIA).

In the ranking of world proven natural gas reserves by country, Nigeria is the largest in Africa with 5.1 trillion standard cubic metres, and the seventh largest globally, ahead of Algeria (second) and Egypt (third). Libya and Angola complete the top five. 

The fall in natural gas production was not unconnected with the decline in crude oil output, which experienced a decrease of 10 percent or 200,000 barrels per day. This is because the bulk of Nigeria’s gas being mined is associated, often treated as a by-product while drilling for oil. Therefore, the movement in gas output is often positively correlated to the trend in oil production. 

Furthermore, gas produced is not often equal to gas sold, as a proportion of gross production is usually subjected to flaring, shrinkage and reinjection purposes. Consequently, of Nigeria’s gross production of 79.6 billion cubic metres, only 48 percent was sold. Out of gross quantity produced, the country exported 64 percent or 24.5 billion cubic metres, making Nigeria the second-highest gas exporter in Africa after Algeria, based on an analysis of data on seven gas-exporting countries provided by OPEC. Also, Nigeria exported 15 percent less gas than its previous year’s figure of 28.2 billion cubic metres. 

Overall, there was a relatively downward movement in output across gas-producing countries in Africa with the exception of Angola. This general decline is critical, considering the fact that gas consumption in Africa grew by 7.5 percent in 2013, leading the global increase in consumption. Going forward, a rapid population increase, as well as rising rates of urbanisation and economic activity, will lead to a surge in energy demand, according to Fatih Birol, chief economist at the International Energy Agency (IEA). 

Angola was the bright light in the horizon with significant production growth of 22 percent over the prior period. The country completed a $10-billion natural gas processing facility and shipped its first LNG cargo to Petrobras, Brazil, in 2013. The Angola plant has the capacity to produce 5.2 million tonnes per year of LNG, 63,000 barrels per day of natural gas liquids for export, and 125 million cubic feet of natural gas per day for domestic consumption. The country is one of the two newest members of OPEC (the other being Ecuador), joining the oil cartel in 2007. Angola is Africa’s second-largest oil producer, behind Nigeria. 

In terms of gas, however, with production of 925 million cubic metres in 2013, Angola is relatively new to the market. In nominal terms, its output is still way behind its sub-Saharan counterparts, including Nigeria with production of 38.4 billion cubic metres in the same period.

Meanwhile, among the four African OPEC member-countries, gross production in 2013 equalled 292.75 billion cubic metres, which was a decline of 3 percent from the previous year. This cumulative production accounted for 29 percent of OPEC’s output for the period. Nigeria with gross production of 79.6 billion cubic metres accounted for the highest drop when compared with its OPEC counterparts in Africa, with a decrease of 6.2 percent. 

Of OPEC Africa’s gross production, 47 percent or 137.4 billion cubic metres was marketed. This represented a fall of 7.1 percent from the previous year’s total of 147.9 billion cubic metres. 

Again, Nigeria and Algeria accounted for the bulk of the decline with decrease of 9.8 percent and 8.5 percent, respectively. Algeria’s gas output has been on a steady downward slope since 2011. The country’s oil and gas industry has been plagued by delays in new production and infrastructure projects, militant attacks on existing installations, and increased competing demand for electricity domestically.

Overall, these two countries still account for the largest share of 86 percent of natural gas produced among OPEC’s African members. In addition, Nigeria’s proportion of flared gas has been dropping since 2011, reducing by an average of 8 percent in the last three years.

Omosomi Omomia