Gas is one of the most valuable commodities to ever exist in financial markets, as it is an indispensable product for basic consumption. Gas, alongside oil, is part of the natural resources that determine Nigeria’s wealth.
Nigeria emerges as Africa’s top gas reserve holder, with 33% of the continent’s total gas reserves, according to the Nigerian federal government. This is equivalent to 206.5 trillion cubic feet (Tcf) of natural gas. Nigeria is the ninth-largest country in the world in terms of natural gas reserves, and the second-largest in Africa after Algeria.
The Tinubu administration also stated that the gas reserves in Nigeria might endure for roughly 94 years while making this disclosure through the Nigerian Upstream Petroleum Regulatory Commission and reported by The Punch NG, a Nigerian socialist newspaper.
The country's gas reserves are located in the Niger Delta region, which is also home to the country's oil reserves. The Niger Delta is a highly contested region, and there have been many clashes between the government and local communities over the exploitation of the region's natural resources.
Nigerian gas could play a massive role in African financial markets, and it could help the Nigerian economy strengthen even further. Indeed, Nigeria is currently heavily reliant on oil exports, which makes the economy vulnerable to fluctuations in oil prices. By developing its gas reserves, Nigeria can diversify its economy and reduce its reliance on oil.
Gas is a clean-burning fuel that can be used to generate electricity. Nigeria has a chronic shortage of electricity, and gas-fired power plants could help to close this gap. Furthermore, the development of Nigeria's gas reserves could create jobs in the oil and gas sector, as well as in the manufacturing and service sectors, and attract foreign investment. And capitalizing on gas could also improve trade. Nigeria could export gas to neighboring countries and to other countries around the world. This could generate foreign exchange earnings and help boost the economy.
Nigeria's President, Bola Tinubu, has been considering cutting gasoline subsidies for some time. The subsidies have been in place for many years, and they have become increasingly expensive as the price of oil has risen. The government estimates that the subsidies cost the country around $5 billion per year.
The government has argued that the subsidies are unfair and that they are not sustainable. They have also argued that the subsidies are not necessary, as the price of gasoline in Nigeria is still relatively low compared to other countries.
If the Nigerian government cuts these gasoline subsidies, it could lead to increased prices for gasoline: The most immediate consequence of cutting gasoline subsidies would be an increase in the price of gasoline. This would likely lead to inflation, as the price of goods and services would also increase.
But it is important to fathom that government subsidies do have negative effects on markets. They can, indeed, distort the market because by artificially lowering prices or increasing demand, it makes it difficult for businesses to compete and make their production more efficient.
This decision though wouldn’t be lightly accepted, however. The government could face political backlash from the public if they go ahead with the cuts. This could lead to protests and demonstrations, and it could even threaten the government's stability because the poor and the middle-class are the most reliant on gasoline subsidies, so they would be the most affected by the price increases.
Nigeria's gas reserves have the potential to help the country's economy in a number of ways. If the government can address the challenges and develop its gas reserves, Nigeria could become a major player in the global gas market.