NIGERIAN GOVERNMENT LNG DEVELOPMENT

Strategy of the Nigerian Government on LNG (Liquefied Natural Gas) Development and Its Impact on Economic Growth

Strategy of the Nigerian Government on LNG (Liquefied Natural Gas) Development and Its Impact on Economic Growth

Introduction

This study examines the current International and National Oil and Gas Company's strategies on LNG development in Nigeria. The role assigned to the corporation has at one time or another included managing the interests of the Federal Republic of Nigeria (henceforth referred to as “the Federation”) in the oil and gas industry, making input into industry policy, accomplishing regulatory functions, and driving Nigeria's economic, industrial, and technological development, primarily through the achievement of endogenous capacities and self-reliance in all spheres of upstream and downstream operations. The corporation's overall mission is to drive Nigeria's economic and technical advancement, leveraging the country's valuable petroleum endowment.

The world has proceeded to witness sustained band shift in crude oil and gas prices since 2004 and this has triggered foremost changes in the global energy landscape. The high prices are likely to be sustained in view of continued robust global economic growth and unrelenting oil demand growth in recent years especially in Asia. Whilst average global oil demand growth from 2002 - 2025 is estimated at about 2%, demand in Asia is forecast at about 4%.

Similarly, the short/medium term imbalance between global LNG demand and supply furthermore suggests that high gas prices may be sustained unless the proposed capacity additions mature. Therefore, fast capacity additions in oil and gas are key to ensuring stability and easing the present situation.

Nigeria's aspiration is aligned with international needs. It focuses on delivering important capacity additions in both crude oil and natural gas. Specifically, the targets are to grow crude oil reserves to 40 billion barrels and production capacity to 4.5 mmb/d in 2010, maximize oil and gas sector value to the economy, and transit from an oil industry to an integrated oil and gas industry. Other aspirations encompass creating as much revenue from gas as oil within the decade, addressing environmental issues, developing the domestic gas market and creating new industries out of the old oil industry.

In line with these aspirations, reserves have grown steadily to over 35 billion of which over 7 billion barrels of oil and 19 tcf of gas have been found out from the deepwater since 1996. In supplement, crude oil production capacity supplement has been stable and in deed, over 500,000 b/d will be supplemented in 2006 alone. The Nigerian finances which is very powerfully reliant on oil income has had a disproportionate reduced contribution to GDP (30%) and economic development as the industry has hitherto not catalyzed commensurate financial activity. Addressing this disconnect is thus an imperative.

Africa's economy emancipation cannot be divorced from Nigeria's economic revival. Nigeria is the most populous black country. One out of every five African is a Nigerian. In essence, realigning the industry is vital to economic revival in Nigeria and ensuring regional stability. This study is going to show an overview into the LNG ...