•$4.9bn gas investments yet to fully pay off
•Past PSCs did not incentivize firms to invest in non-associated gas — NUPRC
•Nigeria needs coordinated action to unlock gas potential —NGA
By Udeme Akpan, Energy Editor
Nigeria’s ambition to power homes and industries with its abundant gas reserves faces a deepening dilemma, following rising gas flaring in the face of worsening electricity supply.
Fresh data from the Nigerian Upstream Petroleum Regulatory Commission, NUPRC, showed that gas flaring increased month-on-month by 10 per cent to 16.679 million standard cubic feet (mmscf) in September 2025, up from 15.057 mmscf in August.
The 16.679 mmscf flared in September 2025 accounted for 8.72 per cent of the nation’s 191,385.21 mmscf output while the 15.057 mmscf flared in August 2025 accounted for 6.87 per cent of 219,280.73 mmscf output.
Year-on-year, flaring rose by seven per cent, translating into a nine-month cumulative total of 150,028.86 mmscf – gas worth about $451 million, enough to power a small-scale plant that can generate 10-50MW.
This wastage comes even as millions of Nigerians remain in darkness and industries run on diesel at record costs.
At the core of the crisis lies a persistent mismatch between gas supply and power demand.
While the country produces over 190,000 mmscf of gas monthly, a part of it is lost to flaring due to poor infrastructure, inadequate processing capacity, and frequent disruptions in crude production.
Financial Vanguard findings showed that a declining crude oil output is also contributing to the gas crises as output of associated gas is declining also.
Current data from NUPRC seen by Financial Vanguard indicates that oil output declined from 1.71 million barrels per day, bpd in July to 1.63 million bpd and 1.58 million bpd in August and September 2025, respectively.
The Electricity Generating Companies, GenCos, have said they could generate up to 8,000MW if supplied adequate gas, yet the transmission grid barely wheezes past 5,000MW, leaving about 3,000MW stranded majorly due to gas inadequacy.
“We are not a priority. There are no guarantees or commitments. With regular payment and gas supply, we can easily raise power generation to 8,000MW,” Dr. Joy Ogali, CEO of Association of Power Generation Companies, APGC, said.
Industries groan
With supply fluctuating and frequent system collapses, many manufacturers are opting out of the national grid altogether.
Top conglomerates, including Dangote Group, NNPC Limited, Chevron, TotalEnergies, Seven-Up, Guinness Nigeria, and MTN, now rely primarily on independent gas-fired plants, a reflection of the loss of confidence in public supply.
Analysts say this trend weakens industrial competitiveness, raises production costs, and discourages new investments, especially in energy-intensive sectors.
Low gas, low power, says LCCI
For the Lagos Chamber of Commerce and Industry, LCCI, the trend portended serious economic risks.
Its Director-General, Dr. Chinyere Almona, told Financial Vanguard that the 13% month-on-month decline in gas output was a red flag.
“The decline likely stems from pipeline vandalism, downtime, and supply chain disruptions. It directly impacts thermal power plants, raises generation costs, and dampens industrial productivity. Nigeria’s shift toward cleaner, cheaper gas-based energy is being undermined,” she said.
Almona called for investment in pipelines, processing plants and storage, alongside stable domestic pricing frameworks and regulatory consistency to attract long-term capital.
She warned that unresolved disputes and frequent labour unrest in the gas sector “could jeopardise critical investments and delay the energy transition.”
Government’s “Gecade of Gas” still on course
However, the federal government has insisted it was not backing down on its “Decade of Gas” initiative.
Under the initiative, launched in 2021, Nigeria hopes to transform into a gas-driven economy by 2030, boosting power supply, industrial use, and exports.
The initiative targets massive investment in pipelines, LNG plants, and processing facilities, to drastically reduce flaring and promote gas-to-power projects.
A government report obtained by Financial Vanguard stated that “increasing gas utilisation for power generation and incentivizing investments in the gas value chain” remained top priorities.
Experts say some problems, including the inability of some operators to end flaring and weak enforcement undermine the initiative.
$4.9bn gas investments yet to fully pay off
According to NUPRC, since the enactment of the Petroleum Industry Act, PIA, more than 25 Non-Associated Gas field development plans have been approved, attracting over $4.9 billion in capital investment and unlocking about 9,790 billion standard cubic feet (bscf) in gas reserves.
Yet, the flare remains stubbornly high, signaling that investment inflows have not translated into proportional production or utilisation improvements.
In its recent report, the Commission, which has made gas a major component of field development plans, stated: “For decades, Nigeria’s oil and gas industry was fixated only on crude oil development, with natural gas left unattended to, or flared. Previous Production Sharing Contracts, PSCs did not provide strong commercial incentives for companies to invest in non-associated natural gas development.”
Using the recent deal involving TotalEnergies/Sapetro consortium with the NNPC as an example of its interventions, the commission said: “The robust gas terms including a profit gas split under the new TotalEnergies/Sapetro consortium PSC with NNPC, implies more favourable terms for investors, which can help stimulate investment and incentivize development.
“This new PSC with TotalEnergies represents a policy shift, in line with the Petroleum Industry Act (PIA) of 2021, which aims to unlock Nigeria’s massive gas potential and evolution towards a gas-powered economy.
“The PIA recognised different economics for oil and gas and introduced separate fiscal terms for both. This is being actualized in this PSC with vigorous Gas Terms which include a more favourable cost recovery mechanism for gas. Improved profit gas splits, giving TotalEnergies a greater share of the proceeds from gas production up to five (5) Trillion Cubic Feet (TCF) and inclusion of gas infrastructure development as part of recoverable costs.
“All of these are designed to encourage the monetization of nonassociated gas, which was previously uneconomical under previous PSCs. With this new PSC, TotalEnergies and NNPC Ltd. are not just targeting oil, but actively incentivizing gas field development for domestic power generation (helping Nigeria address its energy deficit), gas-based industries (fertilizer, petrochemicals, etc.), LNG) exports (which earn significant foreign exchange), this PSC is being positioned as a model or template for future oil and gas.”
“The PSC signed between NNPC Ltd. and TotalEnergies marks a significant step in Nigeria’s petroleum industry. With a vigorous and an incentivized profit gas split, it enables the commercialization of non-associated gas, which was incumbered by unattractive fiscal terms, hitherto. This agreement sets the new standard for PSCs in Nigeria, ensuring future contracts are aligned with the realism Nigeria’s gas utilization objectives.”
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