Nigeria to Triple Natural-Gas Output for Power Supply

Oil Minister Diezani Alison-Madueke
Nigeria's Oil Minister Diezani Alison-Madueke said, “We are moving very aggressively into gas for industrialization purposes. At the same time we have to work very, very critically on our gas-to-power needs.” Photographer: Joe Klamar/AFP via Getty Images

Nigeria aims to almost triple its natural gas production capacity by 2020 to help meet the West African nation’s power and industrial development needs, Oil Minister Diezani Alison-Madueke said.

Africa’s biggest oil producer wants to increase capacity to 11 billion cubic feet per day, from about 4 billion cubic feet now, Alison-Madueke said in an interview yesterday in Abuja, the capital.

“We are moving very aggressively into gas for industrialization purposes,” she said. “At the same time we have to work very, very critically on our gas-to-power needs.”

Nigeria generates less electricity than is needed by its population of about 170 million, the continent’s largest, and has regular blackouts that the government says are a bottleneck for economic growth. A shortage of gas for delivery to power plants is one reason why generation is below capacity.

South Africa, which has a third of the population of Nigeria, generates more than 10 times as much as power.

Royal Dutch Shell Plc and Nigeria LNG Ltd. are among companies with interests in gas production in Nigeria.

“Gas infrastructure is incredibly capital intensive,” Alison-Madueke said. She declined to say how much money Nigeria needs to build the pipelines, water-treatment plants and other resources needed to deliver gas to electricity generators.

Gas Price

“All intending investors are fully aware of the scope of funding that will be required,” Alison-Madueke said in an interview to be broadcast on Bloomberg Television Africa. “We are seeing from both the East and the West interest in our gas investments.” She didn’t identify any countries or companies.

Along with the power ministry, the central bank and the electricity regulator, the oil ministry has agreed to a sales price of gas to power plants of $2.50 per million standard cubic feet, with an additional 80 cents for transportation, the minister said.

Central to plans to develop Nigeria’s hydrocarbons sector is the Petroleum Industry Bill, proposed legislation that aims to increase the country’s share of profit from oil pumped off its shores. The bill, first sent to parliament five years ago, would also pave the way for the privatization of state-owned Nigerian National Petroleum Corp., inside one of whose twin towers in Abuja the minister’s office is located.

“Whilst it is a most critical bill in terms of transformation, accountability in the sector, at this point in time all we can do is work as closely as possible with our counterparts in the National Assembly, the legislators, to try to ensure we support the bill,” Alison-Madueke said.

In March, Finance Minister Ngozi Okonjo-Iweala blamed “intensive lobbying by interest groups” for lawmakers’ failure to pass the bill.

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