1.0 Introduction
1.1 Nigeria's National Gas Endowment

With a reserve of about 187 trillion cubic feet of natural gas, Nigeria has the seventh largest reserve base in the World and the largest in Africa. Nigeria's Petroleum industry has revealed that although the nation is a dominant oil producer, it is just as much or perhaps more of a gas than oil province (World Bank, 2004), Natural gas exists in Nigeria in two forms: associated gas (AG), which is either dissolved in and is involuntarily produced with oil, or lying on top of oil in a combined oil and gas reservoir; the other is non-associated gas (NAG), which comes from reservoirs containing gas only. On average, about 1000 standard cubic feet (SCF) of gas is produced in Nigeria with each barrel of oil. Thus, both associated and non-associated gas exist almost equally in the nation's hydrocarbon industry. Some of the main features of Nigeria's natural gas include the following:

In energy terms, the reserves of national gas in Nigeria are at least of the same order as the reserves of crude oil.

Nigeria's gas reserves exceed the foreseeable needs of domestic, regional and international markets for gas.

Nigeria is yet to explore for gas thus raising the prospects that the nation's gas reserves will likely continue to increase over time.

Nigeria's current gas reserves represent over 5 per cent of the world's total and its undiscovered potential is likely to be significant in scope (WEC, 2003).

1.2 Production Trends

Natural gas was initially discovered in Nigeria in 1958 in an incidental exploitation for crude oil (Osezua, 2002). Development of the gas industry in Nigeria has been a slow process due to lack of a nationwide infrastructure for the transmission of natural gas. Also a small domestic market, constrained by excessive regulation, has become a formidable barrier to the growth of the industry. Consequently, most of the nation's natural gas resources have been flared or re-injected to aid crude oil production.

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