Producers choose lucrative export sales over local obligation
Gas flaring, re-injection, shrinkage impact domestic supply
Emmanuel Addeh in Abuja
Nigeria exported an average of 45.8 per cent of its utilised gas in January and February 2026, even as domestic gas supply to tens of its thermal power plants weakened sharply, worsening electricity shortages across the country.
According to a THISDAY analysis of data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for both months, it implied that Nigeria, which for at least two months has experienced serious power cuts, has been unable to convince gas producers to adhere to the Nigeria’s Domestic Gas Delivery Obligation (DGDO).
The DGDO is a regulatory framework designed to ensure that a portion of gas produced in the country is mandatorily supplied to the domestic market.
Enforced by the NUPRC under the provisions of the Petroleum Industry Act (PIA) 2021, the DGDO requires every gas producer to prioritise domestic supply before exporting gas, particularly to sectors classified as critical, including power generation companies, gas-based industries, and other strategic users.
In contrast, the upstream sector increased its deliveries to meet this obligation last year, delivering 77 per cent of its DGDO as of July 2025, the NUPRC announced at the time.
Minister of Power, Adebayo Adelabu, last week attributed the prioritisation of export by the gas producers to the lucrative nature of export sales, low government-regulated price of gas to the power sector as well as the non-payment of existing debts owed the Gas Companies (Gascos) by the federal government.
In essence, while the DGDO is intended to guarantee energy security by ring-fencing gas for local use, structural and commercial realities have meant that compliance does not always translate into sufficient or reliable supply on the ground.
But a detailed review of the NUPRC data indicated a sustained export bias in gas allocation. In January, exports stood at 97,896.41 million standard cubic feet (MMSCF), accounting for 45.3 per cent of total utilised gas of 216,344.48 MMSCF. In February, exports were 91,740.87 MMSCF, representing an even higher 46.3 per cent of utilised volumes of 198,398.67 MMSCF.
Combined, Nigeria exported 189,637.28 MMSCF within the two-month period, maintaining strong external supply commitments despite a decline in overall production and tightening domestic availability.
Besides, total gas production fell from 233,961.47 MMSCF in January to 212,615.22 MMSCF in February, marking a 9.1 per cent drop. The decline reflected reductions in both associated and non-associated gas output, with the latter recording a sharper contraction, pointing to broader upstream supply challenges.
Despite this, overall gas utilisation remained high, improving slightly from 92.5 per cent in January to 93.3 per cent in February and suggesting that most of the gas produced was effectively captured and deployed, although the pattern of utilisation revealed a structural tilt toward exports.
Domestic gas supply recorded a significant decline over the period as local sales dropped from 62,944.93 MMSCF in January to 52,300.45 MMSCF in February, representing a 16.9 per cent decrease. As a proportion of utilised gas, domestic supply fell from 29.1 per cent to 26.4 per cent, indicating reduced availability for local consumption, including power generation.
In the same vein, gas consumed as field use remained substantial, with volumes standing at 55,503.14 MMSCF in January and 54,357.34 MMSCF in February, translating to 25.7 per cent and 27.4 per cent of utilised gas respectively, further tightening supply to local end-users.
Losses within the system, though moderate, remained significant. Gas flaring declined from 17,166.08 MMSCF in January, representing 7.34 per cent of total production, to 14,085.55 MMSCF or 6.62 per cent in February, a 17.9 per cent reduction. While this indicated some improvement, the volumes remained substantial in the context of domestic shortages.
But gas shrinkage, which are volumes lost during processing and transportation, also dropped sharply from 450.91 MMSCF in January to 131.00 MMSCF in February, suggesting improved operational efficiency in handling and transmission.
Taken together, the data showed that out of total production of 446,576.69 MMSCF over the two months, a significant portion was either exported, consumed in field operations, or lost to flaring and shrinkage, leaving a comparatively smaller share for the domestic market.
The implications for Nigeria’s power sector have been severe over the past two months, as the country has experienced persistent electricity shortages, largely attributed to inadequate gas supply to thermal power plants, which account for over 75 per cent of installed generation capacity.
With domestic gas supply falling within the period and its share of utilisation dropping to just over a quarter, power generation companies have faced increasing difficulty securing adequate feedstock, resulting in reduced output and grid instability.
According to the analysis, while nearly 46 per cent of utilised gas was exported on average, only about 27 per cent was supplied to the domestic market, especially when combined with the significant share absorbed by field use and ongoing flaring, thereby highlighting a widening disconnect between upstream gas allocation and downstream energy needs.
A further review indicated that the imbalances in Nigeria’s gas-to-power challenges are not solely a function of production shortfalls, but also of allocation priorities, infrastructure limitations, and commercial arrangements that favour export markets.
While Nigeria’s installed generation capacity exceeds 13GW on paper, the country typically transmits and distributes less than 5GW in practice, meaning more than half of potential supply is stranded at any given time.
