Nigeria’s natural gas and Africa’s sustainable industrialization – APRI – Africa Policy Research Institute

Report on Nigeria’s Natural Gas Sector and its Role in Africa’s Sustainable Industrialization

Executive Summary

This report analyzes the capacity of Nigeria’s natural gas sector to drive sustainable industrialization across Africa, with a significant focus on its alignment with the United Nations Sustainable Development Goals (SDGs). Nigeria, holding 33% of Africa’s proven gas reserves (206.5 trillion cubic feet), has positioned natural gas as a cornerstone of its “Decade of Gas” (2021-2030) initiative. The strategic utilization of these resources is pivotal for achieving several SDGs.

• SDG 7 (Affordable and Clean Energy): A reliable gas supply is essential to bridge the energy access gap affecting over 600 million Africans, providing a cleaner transition fuel to power industries and homes.
• SDG 9 (Industry, Innovation, and Infrastructure): Natural gas can fuel Africa’s manufacturing, fertilizer, petrochemical, and steel sectors, fostering industrial growth and building resilient infrastructure. Major projects, including the Nigerian Liquefied Natural Gas (NLNG) Train 7 and the Ajaokuta-Kaduna-Kano (AKK) pipeline, are critical to this goal.
• SDG 8 (Decent Work and Economic Growth): The development of the gas sector is poised to create jobs, diversify the economy, and stimulate inclusive growth.
• SDG 13 (Climate Action): Challenges such as persistent gas flaring (188 Billion cubic feet in 2022) undermine climate goals. However, reforms like the Petroleum Industry Act 2021 and the Gas Flare Commercialization Programme aim to balance investment with environmental stewardship, positioning gas as a bridge fuel towards Nigeria’s net-zero 2060 target.

Addressing challenges related to inadequate infrastructure, policy misalignment, and investment deficits is critical to harnessing Nigeria’s gas potential for the collective advancement of the 2030 Agenda for Sustainable Development in Africa.

Nigeria’s Gas Sector in the Context of the Sustainable Development Agenda

The Imperative for Sustainable Industrialization in Africa (SDG 9)

Africa’s industrial sector has historically lagged, hindered by inadequate energy infrastructure, which presents a significant barrier to achieving SDG 9. The Third Industrial Development Decade for Africa (IDDA III, 2016-2025) aims to drive inclusive and sustainable industrial development, aligning with global frameworks like the 2030 Agenda and the African Union’s Agenda 2063. A reliable and affordable energy supply is indispensable for this transformation. Nigeria, with Africa’s largest gas reserves, is strategically positioned to provide this energy, powering the machinery and value-added industries necessary for the continent’s economic and social progress.

Natural Gas as a Catalyst for SDG 7 (Affordable and Clean Energy)

Energy poverty remains a critical challenge in Africa, with 600 million people lacking access to electricity. This directly impedes progress on health, education, and poverty reduction. Natural gas serves as a crucial transitional fuel, offering a cleaner alternative to coal and biomass while providing the reliable, scalable power needed to support grid expansion and industrial operations. By developing its gas resources for both domestic use and regional export, Nigeria can play a central role in achieving universal energy access under SDG 7, improving living standards and enabling sustainable development across the continent.

Analysis of Nigeria’s Gas Sector Capacity and Strategic Direction

Resource Endowment and Production Capacity

Nigeria’s vast natural gas reserves of 206.5 Tcf provide a substantial foundation for long-term energy planning. However, a significant gap exists between potential and actual output. From 2012 to 2021, annual dry gas production averaged 1.5 Tcf, with domestic consumption at 649 Bcf. This underutilization highlights the urgent need to scale up infrastructure and create a bankable domestic market to translate reserves into tangible contributions towards the SDGs.

Key Infrastructure Projects and Contribution to SDG 9

The Nigerian government is advancing several critical infrastructure projects designed to unlock its gas potential and build the resilient infrastructure required by SDG 9.

1. NLNG Train 7: This expansion project will increase Nigeria’s LNG production capacity, boosting export revenues needed to fund national development priorities.
2. Ajaokuta-Kaduna-Kano (AKK) Pipeline: This 614-kilometer pipeline is designed to transport gas to northern Nigeria, stimulating industrial hubs and improving electricity generation.
3. Obiafu-Obrikom-Oben (OB3) Pipeline: This pipeline connects eastern and western gas networks, enhancing the flexibility and reliability of the domestic gas supply system.
4. Trans-Regional Pipelines: Proposed projects like the Trans-Saharan and Nigeria-Morocco Atlantic pipelines aim to create an integrated regional market, fostering cooperation and shared prosperity in line with SDG 17 (Partnerships for the Goals).

National Policies and Alignment with the 2030 Agenda

Nigeria has enacted several policies to govern its gas sector, with varying degrees of alignment with the SDGs.

• Decade of Gas Development (2021-2030): This initiative prioritizes gas for domestic industrialization and power generation, directly supporting SDG 7 and SDG 9.
• Petroleum Industry Act (PIA) 2021: The PIA provides a new regulatory framework intended to attract investment. Its provisions against gas flaring are crucial for SDG 13, but effective implementation is paramount.
• Nigerian Energy Transition Plan: This plan outlines a pathway to net-zero emissions by 2060, recognizing gas as a transition fuel. It seeks to balance the economic objectives of SDG 8 with the environmental imperatives of SDG 13.
• Gas Flare Commercialization Programme: This program aims to capture and monetize flared gas, turning an environmental liability into an economic asset and reducing greenhouse gas emissions.

Challenges to Achieving Gas-Led Sustainable Development

Environmental and Climate Action Hurdles (SDG 13)

The continued practice of gas flaring is a major obstacle to Nigeria’s climate commitments. Flaring not only wastes a valuable resource but also releases significant amounts of CO2 and methane, undermining progress on SDG 13. While policies are in place to curb this practice, weak enforcement and inadequate infrastructure for gas gathering have limited their impact. Aligning the “Decade of Gas” initiative with the emissions reduction targets of the Energy Transition Plan is a critical and complex challenge.

Infrastructure and Investment Deficits (SDG 9)

Realizing Nigeria’s gas ambitions is contingent on overcoming substantial infrastructure deficits. Key challenges include:

• Insufficient pipeline networks for domestic distribution.
• Lack of gas processing facilities to treat and prepare gas for market.
• A non-bankable power sector characterized by poor payment discipline, which deters investment in gas-to-power projects.

These deficits hinder the development of a commercially viable domestic gas market, which is essential for fueling industrialization and achieving SDG 9.

Policy Recommendations for a Sustainable Gas Future

Strengthening Governance for SDG Alignment

1. Integrate SDG Frameworks into Energy Policy: Ensure all gas sector policies, including the “Decade of Gas,” are explicitly aligned with Nigeria’s commitments under the Paris Agreement and the 2030 Agenda, particularly SDG 7, 9, and 13.
2. Enhance Regulatory Enforcement: Strengthen the capacity of regulatory bodies like the NUPRC to enforce provisions of the PIA, especially those related to gas flaring and environmental management.
3. Improve Inter-Agency Coordination: Foster greater collaboration between the Energy Transition Office, the NCCC, and ministries responsible for gas development to ensure policy coherence, in the spirit of SDG 17.

Mobilizing Investment for Critical Infrastructure (SDG 9 & 17)

1. De-risk Investment: Implement credible payment security mechanisms and cost-reflective tariffs in the power sector to make gas supply projects bankable and attractive to private investors.
2. Promote Public-Private Partnerships (PPPs): Actively pursue PPP models for the development of pipelines, processing plants, and storage facilities to leverage private sector capital and expertise.
3. Engage International Partners: Collaborate with international financial institutions and development partners to secure financing for gas infrastructure, framing these projects as catalysts for achieving multiple SDGs.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

The article on Nigeria’s natural gas sector and its role in Africa’s sustainable industrialization addresses several Sustainable Development Goals (SDGs). The analysis identifies the following SDGs as being directly relevant to the core themes discussed:

• SDG 7: Affordable and Clean Energy: The article’s central theme is leveraging natural gas to bridge the energy access gap in Africa, where “over 600 million Africans [are] without electricity.” It discusses expanding energy infrastructure and positioning gas as a “bridge fuel” in the transition to cleaner energy systems.
• SDG 8: Decent Work and Economic Growth: The article highlights the economic potential of Nigeria’s gas sector to “drive domestic growth and regional industrialization.” It mentions specific economic targets, such as the ‘Decade of Gas’ initiative’s goal to generate “USD 12 billion in revenue and creating two million jobs by 2030.”
• SDG 9: Industry, Innovation and Infrastructure: This goal is explicitly and repeatedly addressed. The article focuses on “sustainable industrialization” for Africa, powered by a reliable gas supply for “manufacturing, fertiliser, petrochemical, and steel sectors.” It details major infrastructure projects like the “Ajaokuta-Kaduna-Kano (AKK) and Obiafu-Obrikom-Oben pipelines” and LNG terminals.
• SDG 12: Responsible Consumption and Production: The issue of gas flaring is a key challenge identified in the article, representing inefficient use of natural resources. The mention of the “Gas Flare Commercialization Programme” directly relates to promoting resource efficiency and reducing waste.
• SDG 13: Climate Action: The article connects gas development to climate goals, referencing Nigeria’s commitment to the “Paris Agreement” and its plan to achieve “net-zero 2060.” It discusses the need to balance gas expansion with reducing greenhouse gas emissions and addressing methane emissions from flaring and leaks.
• SDG 17: Partnerships for the Goals: The article underscores the importance of collaboration. It mentions regional partnerships like the “Trans-Saharan Gas Pipeline” involving Algeria and Niger, international cooperation with the “European Union (EU)” for LNG imports, and the need for “public-private partnerships” to fund large-scale infrastructure projects.

2. What specific targets under those SDGs can be identified based on the article’s content?

Based on the article’s content, several specific SDG targets can be identified:

1. Under SDG 7 (Affordable and Clean Energy):
   • Target 7.1: By 2030, ensure universal access to affordable, reliable and modern energy services. The article directly addresses this by highlighting the need to bridge the energy gap for “600 million people, or 43 percent of the total population, [who] lack access to electricity.”
   • Target 7.b: By 2030, expand infrastructure and upgrade technology for supplying modern and sustainable energy services for all in developing countries. The article is replete with examples, such as the construction of “NLNG Limited Train 7,” the “AKK pipeline,” and plans for “nine more LNG terminals.”
2. Under SDG 8 (Decent Work and Economic Growth):
   • Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation. The article discusses diversifying Nigeria’s economy away from oil reliance by developing gas-based industries like “fertilizers and petrochemicals.”
   • Target 8.5: By 2030, achieve full and productive employment and decent work for all. The ‘Decade of Gas’ initiative’s goal of “creating two million jobs by 2030” is a direct link to this target.
3. Under SDG 9 (Industry, Innovation and Infrastructure):
   • Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure, including regional and transborder infrastructure, to support economic development. The development of the “Trans-Saharan Gas Pipeline” and the “West African Gas Pipeline” are prime examples of transborder infrastructure projects mentioned.
   • Target 9.2: Promote inclusive and sustainable industrialization. This is the core subject of the article, which examines Nigeria’s potential to use its gas to “support the industrialization of select African countries and regions.”
4. Under SDG 12 (Responsible Consumption and Production):
   • Target 12.2: By 2030, achieve the sustainable management and efficient use of natural resources. The article’s focus on reducing “persistent gas flaring (188 Billion cubic feet (Bcf) in 2022)” and implementing the “Gas Flare Commercialization Programme” to monetize this wasted resource directly aligns with this target.
5. Under SDG 13 (Climate Action):
   • Target 13.2: Integrate climate change measures into national policies, strategies and planning. The article mentions Nigeria’s “Energy Transition Plan,” its commitment to “net-zero emissions by mid-century,” and its Nationally Determined Contribution (NDC) targets under the Paris Agreement as evidence of this integration.
6. Under SDG 17 (Partnerships for the Goals):
   • Target 17.17: Encourage and promote effective public, public-private and civil society partnerships. The article recommends “public-private partnerships” to “mobilize the necessary capital for infrastructure development” and highlights existing partnerships like the one between “UTM Offshore and Nigerian National Petroleum Corporation (NNPC).”

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

Yes, the article contains several quantitative and qualitative indicators that can be used to measure progress towards the identified targets.

1. For SDG 7 (Affordable and Clean Energy):
   • Indicator for Target 7.1: The proportion of the population with access to electricity. The article provides a baseline figure: “600 million people, or 43 percent of the total population, lack access to electricity.” Progress would be measured by a reduction in this number.
   • Indicator for Target 7.b: Investment in energy infrastructure. The article provides specific figures, such as the “USD 2.8 billion” cost for the AKK pipeline and the “combined production capacity of approximately 22 million tonnes per annum (MTPA)” from existing LNG trains, which can be tracked over time.
2. For SDG 8 (Decent Work and Economic Growth):
   • Indicator for Target 8.5: Job creation. The article provides a specific, measurable goal: the creation of “two million jobs by 2030” under the Decade of Gas initiative.
3. For SDG 9 (Industry, Innovation and Infrastructure):
   • Indicator for Target 9.2: Manufacturing/Industry value added as a percentage of GDP. The article provides a baseline trend: “Industry value added (percent of Gross Domestic Product (GDP)) in sub-Saharan Africa declined by 19 percent, from 34 percent in 1981 to 27.4 percent in 2023.” Reversing this decline would indicate progress.
4. For SDG 12 (Responsible Consumption and Production):
   • Indicator for Target 12.2: Volume of wasted natural resources. The article quantifies the amount of gas flared: “188 Bcf flared in 2022.” A reduction in this annual figure would be a direct measure of improved resource efficiency.
5. For SDG 13 (Climate Action):
   • Indicator for Target 13.2: Greenhouse gas emissions. The article mentions Nigeria’s commitment to “reducing greenhouse gas emissions by 20 percent by 2030” and achieving “carbon neutrality by 2060.” The volume of gas flared, “5.32 Bcm in 2022,” also serves as a direct indicator of emissions that can be tracked.

4. Table of SDGs, Targets, and Indicators

Source: afripoli.org