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Nigeria to Play a Major Role in Turkey’s Energy Sector

-Anietie Udobit,agency reports

 

Nigeria is one of Turkey’s largest trading partners in Africa, and trade remains an integral component of Nigeria – Turkey bilateral relations. In 2014, trade between the two countries reached approximately US $2.5 billion. However, this figure fell to US $1.5 billion in 2015 and approximately US $1 billion in 2016, largely due to a drop in global oil and gas prices.

Over the past several decades, Nigeria has become one of Turkey’s most important providers of liquid natural gas (LNG), currently accounting for more than 20 percent of LNG imports. However, this trade relationship has the potential to develop and expand as the global LNG market flourishes, and both the Turkish and Nigerian governments invest in furthering their domestic LNG sectors.

Nigeria’s oil and gas industry is the largest on the continent, with attention traditionally focused on oil production. However, with global oil prices having remained lower than expected for longer than expected, attention has increasingly shifted to Nigeria’s natural gas sector.

In fact, Nigeria’s most significant natural resource is natural gas. Boasting the 9th largest gas reserves in the world, and the largest in Africa, Nigeria’s gas reserves are estimated at 187 trillion cubic feet (Daily Mail, 08.03.2017).

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Although only 3 percent of Turkey’s natural gas is sourced from Nigeria, Nigeria accounts for more than 20 percent of Turkey’s LNG imports. The natural gas is imported through a contract between Nigeria LNG Limited (NLNG) and Turkey’s state-owned BOTAS Petroleum Pipeline Corporation, and since November 1999, Nigeria has delivered more than 4,000 LNG cargos to BOTAS’s Mamara LNG Terminal in Turkey.

Furthermore, in 2014, Nigeria exported about 900 billion cubic feet of LNG, accounting for some 8 percent of LNG traded globally and ranking Nigeria as the world’s fourth largest LNG exporter (Practical Law, 01.05.2017). Notably, the global LNG market is one of the fastest growing markets in the world, and is set to increase by about 50 percent between 2015 and 2020.

This is nothing but good news for Nigeria LNG (NLNG) – a private company in which the government holds a 49 percent stake.

Since production began in 1999, NLNG has been one of the fastest growing companies in the world. With six trains currently operational, NLNG’s gas plant in Finima, Bonny Island in Rivers state, has a total processing capacity of 22 million tonnes of LNG a year, and up to 5 million tonnes of natural gas liquids (LPG and condensate).

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It is also estimated to contribute about 4 percent of Nigeria’s Gross Domestic Product (GDP) (NLNG, 24.07.2017); and with plans to add a further two trains, NLNG could unlock three times as much gas as the country’s proven reserves.

NLNG currently has contracts with several buyers across the world, as well as with Turkey’s BOTAS. However, the Sales Purchase Agreement (SPA) between NLNG and BOTAS is set to end in October 2021, and no further deal has yet been agreed.

Notably, Shell, a 25.6 percent shareholder in NLNG, has already made clear its desire to provide more LNG for Turkey, believing that Turkey has the potential to become a regional natural gas trade hub.

Turkey has become one of the fastest growing energy markets in the world. Strong economic growth over the last decade has contributed to a 4.4 percent average annual increase in energy consumption by Turkey between 2005 and 2015. And despite a slowdown in the economy in more recent years – due to both domestic and international political tensions – Turkey’s energy demand is expected to continue rising for the foreseeable future.

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Despite this increasing demand for energy, only around 25 percent of Turkey’s total energy demand is being met by domestic energy resources, leaving the country extremely reliant on external sources. Notably, 98 percent of Turkey’s natural gas – which has become Turkey’s main source of energy in recent years – comes from external sources, imported through pipelines from Russia (60 percent), Iran (20 percent) and Azerbaijan (10 percent), and increasingly from LNG sources (Nigeria and Algeria).

This dependence on foreign imports has become a point of concern for the government in Ankara, particularly following a deterioration in relations with Russia, Turkey’s biggest natural gas importer. Ensuring its current and future energy security is a top priority.

 

-OilPrice.com

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