As global demand for Liquefied Natural Gas (LNG) rises, operators and stakeholders have advocated the need to explore innovative solutions, especially as producers experience new long-term contracts.
According to many of the operators, the LNG market, though threatened by volatility in the short term, has witnessed increased investments across the board.
For Nigeria, it is a mix, considering that it can get premium for its product but unable to maximise opportunities created by the present global crisis to improve production and enter new markets.
Although Wood Mackenzie sees demand falling in its outlook, it, however, confirmed that uncertainty does remain, as extremely cold weather this winter or reduced Russian flows could put Europe on a different trajectory.
Vice President, Gas and LNG Research for Wood Mackenzie, Massimo Di Odoardo said: “Should Nord Stream flows not resume following September maintenance, European inventories might still end up at 26 per cent by the end of this winter, although they might only be able to get to 81 per cent ahead of next winter.”
The biggest risk, though, will be the weather, according to Wood Mackenzie. If the northern hemisphere has an extremely cold winter, increasing the need for heating across Europe and Asia could add up to 30 billion m3 to winter demand and risk-reducing European storage inventories down to four per cent by March and up to only 63 per cent ahead of the start of following winter, inevitably resulting in demand curtailments.
Already, Italian energy group, Eni, plans to invest around 4.5 billion euros ($4.47 billion) in upstream activities each year from now to 2025 focusing on several countries, its deputy chief operating officer for natural resources said on Tuesday.
“We are fully committed to invest 4.5 billion yearly in the upstream to bring on line new gas supplies,” Cristian Signoretto said at the Gastech conference in Milan.
Speaking during a panel session on ‘Bridging the project funding gap in a time of geopolitical uncertainty, Group Executive Director, Gas and Power, Mohammed Ahmed, confirmed that investment has been consistent in Nigeria, adding that financing upstream investment is key.
“Someone has to do it. Several efforts have been put in place to enhance investment. The transitioning of the NNPC is expected to aid investment”, he said.
He, however, noted that the country remains challenged by infrastructure to deepen gas utilisation.
“Feed gas into many gas plants being built cannot happen without the upstream segment. We need to depart from main export to domestic consumption. Also, gas-based industries need to mature to aid offtake. There is a large potential in domestic market consumption but needs investment. Identified projects need funding. We seek investment in the sector. There’s a level playing ground with the liberalisation in the upstream through the PIA for investors,” he added.