Natural gas sales rise 4.5% to 47 billion cubic meters in 2016
According to data compiled by the International Energy Association, (IEA), the world saw greater demand for natural gas in 2016 with imports rising by 4.5 percent over 2015 figures to 47 billion cubic meters (bcm).
This calls to question Nigeria’s inaction to quickly complete gas reforms that will reduce gas flaring, fully liberalise the gas market, and lead to investments new LNG trains to take advantage of global rising demand for natural gas.
Data released by the Nigerian Bureau of Statistics (NBS) last week, showed that a total of 244.84 billion standard cubic feet of natural gas was flared last year. With gas prices at $2.90 per 1,000 scf, this translates to $710 million or N217 billion using official exchange rate of 305.25 Naira to the dollar.
According to a release by the Paris-based energy think-tank, the greater demand for gas led to increases in trade, with growth in pipeline gas trade going into the Organisation for Economic Co-operation and Development (OECD) countries and Liquefied Natural Gas trade going to Asia. Together the increases saw total global gas imports increase by about 47 billion cubic meters (bcm) in 2016, close to 4.5 percent higher than 2015 levels.
The agency further said that alongside the growth in gas generation, 2016 also saw the continued increase of renewable generation across the OECD and in countries like China. In the OECD, renewables generation grew by 3.8% to account for 23.8% of all electricity generated, its highest share to date. The growth was largely driven by wind and solar PV, which saw annual average growth rates of 21% and 43% between 2000 and 2016.
Nigeria has drawn up a national gas masterplan but cannot be fully implemented due to policy contradictions. The Minister of Petroleum Resources fixes gas prices at $7 per sf for local manufacturers but mandates gas producers to sell at $2.90 to power plants, who owe producers over N50billion.
Meanwhile, the global natural gas market is undergoing a fundamental transformation. Industry has overtaken the power sector as the driving force behind the growing use of gas, due to rising demand in places like the People’s Republic of China, developing Asia, the Middle East and the United States.
At the same time, structural changes in gas supply and trade are changing the global gas market. Heavily oversupplied markets, the ongoing shale-gas revolution in the United States, the second wave of additional liquefaction capacity from Australia and the US, and the fast-growing LNG trade are disrupting traditional gas business and pricing models. This is forcing market players to redefine their strategies and explore new markets.
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