Financial Crisis Looms as Nigeria's Gas Revenue Drops Massively by 50.2 Per Cent

Nigeria's revenue generation from gas has suffered a massive setback in recent times with the NLNG expressing worries on the effect on the economy. 

Gas proceeds from the Nigeria Liquefied Natural Gas and others have dropped by 50.2 per cent from $169.728m in January, the latest data from the Nigerian National Petroleum Corporation have showed, according to the Punch.

The NNPC put gas proceeds from the NLNG, Escravos Gas to Liquid, Natural Gas Liquids and NGAS in October at $84.575m.

“Export gas sales and NLNG feedstock accounted for $84.57m i.e. 18.97 per cent contribution to the Federation Account compared with 31.21 per cent contribution in September,” the corporation said in its latest monthly report.

The dip in gas revenue was partly as a result of the sustained fall in global natural gas prices since last year and increased supply in the market. From a peak of $6 per million British thermal unit last year, the natural gas price has fallen below $2 per mmBtu this year. It was trading around $1.98 per mmBtu.

The NLNG Limited had recently warned that its revenue was being threatened at the international market amid the fall in global oil prices. Many of the global natural gas markets are linked to oil prices, which have fallen by more than 65 per cent since June last year.

The firm expressed worry over the impact that the fall in crude prices was having on its revenue, stressing that the entry of the United States and Australia into the LNG market was “a real cause for concern.”

The NLNG stated, “The recent fall in crude oil prices from above $100 per barrel in early 2014 to below $60 per barrel in early 2015 and its impact on global LNG/gas prices as well as the demand/supply positions in both our primary and secondary markets in the Atlantic and Pacific Basins have had a significant impact on our revenues and profitability.

“The trend, which will persist till the end of 2015, and which may even worsen going into 2016 with the entry of US and Australian LNG volumes into the market, is a real cause for worry.”