Abstract

A naturally occurring fossil fuel of light hydrocarbons, natural gas has become an important industrial input, propelling economic growth and development in both industrialized and developing countries. The global demand for natural gas has been accompanied by a booming business in the marketing of Liquefied Natural Gas (LNG), particularly in the last decade. Driven by the need to commercialize the nation's huge gas reserves, as well as the imperative to reduce its dependence on crude oil, the Federal Government decided in 1995 to revive the Nigeria LNG project, as a vehicle to facilitate the nation's entry into the global LNG market Nigeria LNG accomplished its first shipment of LNG cargoes to the world market in October 1999, ushering in a new era in the country's long-standing drive to diversify its export revenue.

However, the actualization of LNG projects in Nigeria is not without challenges. Constraints include funding difficulties, particularly on the part of the Federal Government. Among other challenges, there is need for an enabling environment necessary to inspire investors' confidence, a precondition for the attraction of crucial foreign investment into the industry. Therefore this paper provides a strategic policy framework promoting liberalization of the nation's gas industry. It also prescribes economic and administrative incentives needed to propel Nigeria's nascent LNG Industry towards a dynamic performance and to becoming a regional force in the global LNG market

1.0 Natural Gas Profile: A Global Overview

The world is endowed with enormous, although finite natural gas resources. Estimates of its size continue to grow in recent times, spurred by innovations in exploration and extraction techniques (UNCTAD, 2004). Indications are, however, that natural gas resources are widely and bountifully distributed around the world, with a significant proportion of the resource yet to be discovered.

The Middle East is the region with the lion share of the world's natural gas reserves, with 40% of global endowment. This position is followed by the Russian Federation, with 27% of the total. The former Soviet Union along with Eastern Europe is credited with the World's second largest natural gas reserves, with 38% of the World's total.

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