The increasing production of oil and gas from unconventional sources and terrains especially from shale, may affect Nigeria’s oil export and gas. This is because it is estimated that liquefied natural gas (LNG) production is likely to remain stagnant at 22 million metric tons per year till 2015, just as the global market share of LNG has continued to drop.
The Managing Director of ExxonMobil upstream operations in Nigeria, Mark Ward, who disclosed this, noted that oil-consuming countries such as China and Japan are looking at alternatives that would ensure steady supply of oil and gas to them as the United States.
According to reports, the United States would soon be self-dependent in oil and gas productions from shale, which may negatively affect Nigeria particularly as the United States has over the years been the major importer and consumer of Nigeria’s oil.
Ward, who was the guest lecturer at the 2013, Aret Adams Lecture held in Lagos, said that although the United States has been a marginal consumer of Nigeria’s LNG, the fear is that shale gas production would soon make the U.S. a net exporter of LNG, which may make it difficult for Nigeria to find market for its LNG.
The ExxonMobil chief noted that according to the Energy Information Administration (EIA), Nigeria exported 17.97 million metric tons of LNG in 2010, making the country the 5th largest LNG exporter in the world and the largest LNG exporter in the Atlantic Basin. Europe, with 67 per cent is Nigeria’s biggest export market. The U.S. imported 0.86 million metric tons of Nigerian LNG (five per cent), or only one per cent of total U.S. LNG imports.
He said: “So, while we see that the U.S. is not a significant export market for Nigerian LNG, the real danger to Nigeria lies in potential U.S. export of her shale gas to global LNG market.
“Indeed in 2011, the impact of the U.S. shale gas boom was not felt by Nigeria because more of the country’s LNG exports went to Japan, where Nigerian exports tripled due to increased LNG demand following the Fukushima nuclear accident.
“However, we know that quite a few countries (notably Australia and China) are interested in applying the technology which has allowed North America to unlock unconventional gas,” he said.
Although there are concerns that these countries may not achieve the same success as the U.S., Ward said that while current forecast is that similar commercial production remains some years away, the point to note is that interest in unconventional production is growing, even in Europe, Nigeria’s biggest LNG market.
He added: “It is worth pointing out that Nigeria’s share of global LNG market dropped in 2011, from 10 per cent to seven per cent, mainly due to lack of recent capacity increase and rising production from Qatar and Australia. Nigeria’s estimated LNG production capacity is currently 22 million metric tons per year, and no major increase is expected to come online before 2015.
“With Nigeria’s proven natural gas reserves put at an estimated 180 trillion cubic feet as of end 2011 – the ninth largest in the world – the country needs to open up her market and focus on being a competitive, low-cost, high-reliability supplier to the global market.”
