By Musa Ibrahim
Nigeria is moving towards a market-driven gas pricing system, but the transition will depend on whether infrastructure, investment and consumer protection can advance quickly enough to support the change.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has set a one-to-two-year horizon for Nigeria to move from regulated domestic gas prices to a willing-buyer, willing-seller regime, potentially reshaping the economics of the country’s gas industry.
The NMDPRA Chief Executive, Rabiu Umar, announced the timeline in Lagos at the 49th Nigerian International Conference and Exhibition organised by the Society of Petroleum Engineers Nigeria Council.
The move addresses a longstanding demand from gas producers for prices that better reflect investment costs and commercial realities. Current domestic prices stand at $2.18/mcf for gas-to-power and below $2/mcf for gas-based industries, while producers have sought increases to between $2.60/mcf and $5/mcf.
Umar said the Petroleum Industry Act already provides for the transition, but implementation must follow the development of infrastructure and market access.
He said: “And then on gas tariff, while we’re monitoring and consolidating on the gas-based price regime of the PIA, we’re guiding an orderly transition towards a willing buyer, willing seller framework as infrastructure expands and market access improves.
“I know this is a sore point for a lot of the gas producers. The goal of the government is not to have gas to be regulated forever. No. The PIA is very clear, black and white. There is a transition. We haven’t reached that level of maturity.
“But the idea is that in the next year or two, we should be on a willing buyer, willing seller basis. And of course, in the interim, our job is to make sure there’s open access and to make sure that that does not become a bottleneck for people who want to invest in that space. And then again, aligning with global expectation means turning environmental liabilities into economic assets.”
The immediate issue is therefore less about abandoning regulation than creating the conditions under which regulation can be reduced without making gas unaffordable or discouraging investment.
NMDPRA plans to maintain the existing regime in the interim while improving third-party access to pipelines. The authority is also mapping demand clusters around the Oben-Obiafu-Obrikom and Ajaokuta-Kaduna-Kano pipelines, while preparing for another round of gas distribution licences.
The AKK pipeline is expected to be particularly important for unlocking industrial demand along the Abuja corridor. At the same time, greater LPG and CNG adoption is being pursued to diversify household and transport energy consumption.
The pricing question is also tied to Nigeria’s broader ambition to make gas a foundation for industrial growth. Under the Decade of Gas framework, NMDPRA is seeking to move beyond policy formulation towards physical delivery, with gas targeted at power generation, industry and transport.
But investors are looking beyond pricing alone.
Speaking for Shell Nigeria Exploration and Production Company, General Manager, Development and Subsurface, Nigeria Deepwater, Jiang Kun, said Nigeria needed policy certainty and an enabling environment to attract the capital required to develop its deepwater resources.
She said Nigeria had the population, resources and growing demand to become a major energy investment destination, but that potential must be converted through action on capital, business conditions and technology.
Seplat Energy Chief Executive Officer, Effiong Okon, similarly argued that Nigeria needs an “energy addition” strategy rather than simply removing existing sources.
Okon said energy sufficiency underpins prosperity and called for more reliable supply, stronger infrastructure and deeper gas development. He identified competitiveness, reliable infrastructure, gas-to-industry projects, lower-cost and lower-carbon production, and practical collaboration as priorities.
The coming two years will therefore be critical. Market-based gas pricing could strengthen investment incentives and production, but its success will depend on whether Nigeria can simultaneously expand infrastructure, protect access for consumers and maintain a predictable regulatory environment.
The larger objective is to make gas commercially viable without losing sight of its role in powering Nigerian homes, businesses and industries. The transition will be judged not simply by whether prices become market-driven, but by whether a more functional gas market produces more supply, investment, industrial activity and energy security.
