Natural gas as Nigeria’s panacea against next global oil shock

In recent weeks, renewed geopolitical tensions between the United States and Iran, alongside broader instability in the Middle East, have once again reminded us of how global events can affect local economic realities. Iran’s closure of the Strait of Hormuz, a critical passage that carries roughly one-fifth of the world’s oil supply, triggered immediate disruptions across global markets.

Despite improvements in domestic refining capacity, Nigeria remains exposed to global oil price volatility. Refined petroleum products are still partly imported, and even locally refined fuel is priced based on international crude oil rates, since refineries source crude at global prices, whether from NNPC Limited or other suppliers. The implication is straightforward. When global oil prices rise, domestic fuel prices follow. This feeds directly into inflation. Transport costs increase. Food prices climb. Purchasing power declines. Economic stability weakens.

This is unlikely to be a one-off event, but rather a signal that global oil shocks will persist. The more pressing question is how Nigeria can protect itself from them.

Nigeria has abundant natural gas resources, and in response, must accelerate the domestic utilisation of this resource as a buffer against global oil price shocks and as a pathway to energy independence and resilience. According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigeria’s proven gas reserves hit 210.54 trillion cubic feet (Tcf) as of January 2025, making it the largest on the continent ahead of Algeria and Egypt. Current national gas production per the NMDPRA February 2026 Fact Sheet is 7.28 billion cubic feet per day (Bcf/d), with 3.02 Bcf/d exported as liquefied natural gas (LNG), and 1.76 Bcf/d used domestically.

Gas presents a clear opportunity to stabilise domestic energy costs, reduce dependence on imported fuels, support industrial growth and improve energy security. Unlike crude oil, which is highly exposed to global spot price volatility, natural gas offers a fundamentally different economic structure. Gas for industrial users or export is often priced under long-term contracts. For local consumption, pricing is protected from price shocks because production and distribution are local, with no impact from global sanctions, supply chain disruptions, or armed conflict. This provides a level of price stability that can shield domestic economies from sudden external shocks.

In terms of policymaking and implementation, the Presidential Initiative on Compressed Natural Gas and Electric Vehicles (Pi-CNG & EV) is the flagship programme under President Bola Ahmed Tinubu, designed to accelerate Nigeria’s transition to cleaner, more sustainable transport solutions. At its core, the initiative aims to position CNG as the preferred fuel for mobility, while reducing the country’s reliance on petroleum products in a post-subsidy environment. Since its inception, the programme has made significant strides in building the infrastructure required for a national energy transition. Over 300 new conversion centres and 58 refuelling stations have been established across 28 states, laying the foundation for widespread adoption.

In parallel, the initiative has supported the deployment of 655 CNG buses, 5,123 CNG tricycles, and 40 electric buses into Nigeria’s transport network. This adoption is only expected to accelerate as more users begin to run the numbers. Natural gas as a preferred fuel for automobiles and as a hedge against global oil price shocks is no longer theoretical. It has already been tested by recent events. Before the Iran-related disruptions, CNG for transport was approximately 50% cheaper than conventional distillate fuels. With the recent surge in fuel prices, that cost advantage has widened to nearly 70%, making an even stronger case for the transition to gas as the preferred fuel for transport.

Importantly, the Pi-CNG & EV builds on the policy direction set by the Decade of Gas initiative, launched in 2021 with a mandate of increasing gas production by 50 percent by 2030 and turning Nigeria into a gas-powered economy by 2030. The initiative has recorded some key gains, including identifying strategic projects that will help deliver 4.6 Bcf/d of gas to meet growing demand across sectors. This is alongside its identification of 70 strategic gas projects, which require regulatory and commercialisation support. These projects are projected to generate as much as $20 billion in investments while driving gas supply across sectors.

President Tinubu’s tenure has also been marked by the inauguration of gas infrastructure projects undertaken by NNPC Limited and key infrastructure partners, including the AHL Gas Processing Plant, the ANOH Gas Processing Plant, and the 23.3 kilometres ANOH to Obiafu-Obrikom-Oben (OB3) Gas Pipeline, amongst others. NNPC Limited has also partnered with private sector players to construct plants that will improve gas supply to industrial and commercial users. In January 2025, projects including NNPC Prime LNG, NGML/Gasnexus LNG, Highland LNG and BUA LNG were flagged off, with NNPCL holding ownership stakes. Similarly, LNG Arete was also flagged off, with NNPCL providing strategic support without equity participation.

In total, these plants have a combined capacity of 97 million standard cubic feet of gas per day (mmscf/d), representing significant capability to provide off-grid gas supply to industries and enable gas supply to meet the growing demand in the transportation sector.

Beyond domestic resilience, gas also presents a geopolitical and economic opportunity. Disruptions in global energy supply, such as constraints on LNG exports from Qatar due to instability around the Strait of Hormuz and the drone attacks on Qatar LNG’s infrastructure, create openings for alternative suppliers.

Nigeria is well-positioned to fill part of this gap. Key projects such as the Nigeria LNG Train 7 expansion, which builds on the existing 22 million tons per annum capacity via its six- train production plant as of April 2025, alongside strategic pipeline initiatives like the West African Gas Pipeline expansion, Trans-Saharan Gas Pipeline and the Africa Atlantic Gas Pipeline (formerly called Nigeria–Morocco Gas Pipeline), could unlock access to European and other African markets. These pipeline networks open up an ambitious African market to Nigeria, allowing us to offer a consistent gas supply to African neighbours while unlocking the elusive European market, mirroring Qatar’s LNG dominance in key markets.

The argument is no longer about whether Nigeria should prioritise gas. It is about how quickly it can do so that it is resilient, diversified, and less exposed to external shocks.

Every global oil disruption reinforces the same lesson: dependence on petroleum alone leaves Nigeria vulnerable. By scaling gas infrastructure and utilisation, Nigeria can protect itself from future oil shocks, stabilise domestic prices, strengthen economic resilience and unlock new export opportunities.