State-owned Nigerian National Petroleum Co (NNPC) has signed a deal with Norway’s Golar LNG to construct a new offshore plant to extract liquefied natural gas (LNG).
The floating plant will take advantage of Africa’s largest estimated natural gas reserves.
Golar already operates in conjunction with BP in Mauritania on a similar floating LNG project. Nigeria is Africa’s penultimate LNG exporter. In 2022 however, it exported 6.3 million tonnes less than Africa’s LNG leader, Algeria, which exported 29.3 million tonnes.
The Memorandum of Understanding for the project comes after NNPC announced it expects vast investment into a natural gas pipeline that will spread across 11 countries. The proposed $25bn, 5,600km project would link Nigeria to 11 other countries on its way to Morocco. After this, the as-yet-unnamed pipeline would link to Spain or Italy. The Moroccan government has already signed a Memorandum of Understanding with NNPC for the project.
A potential reason for NNPC expanding its LNG operation is the trouble it has had on its oil operations as late. Oil theft is prevalent in the country, hampering the industry. Numerous projects have been forced to partially shut down in order to prevent theft. In other criminals tricked workers into working at unlicensed oil plants. With an estimated 700,000 bpd of oil going missing, the issue loses Nigeria close-to $700m per month.
A result of this is that in 2022, Nigeria slipped behind Angola in its month-to-month oil production rankings multiple times. In July 2022, Nigeria produced fewer than 1 million barrels per day (bpd). It placed them behind Angola for the third monthly total that year. Although it was reported in February that production had risen again to 1.6 million bpd, this still lies below the 1.8 million quota set by OPEC.