FG Announces New Gas Price for Strategic Sectors

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has declared the appropriate wholesale price of natural gas for the strategic sectors as well as the 2024 Domestic Base Price (DBP).

The agency, under the signature of its CEO, Farouk Ahmed, announced the creation of the 2024 DBP and set the base price for the gas-to-power (Power sector) at $2.42 per million British thermal units (MBTU) and $2.92 MMBTU for the commercial sector.

Mr. Ahmed stated in a letter titled “Announcement on Establishment of the Year 2024 Domestic Base Price (DBP) and Applicable Wholesale Price of Natural Gas for the Strategic Sectors” that a clear regulatory framework for the determination of a market-based pricing regime for Nigeria’s domestic gas market is provided by the Petroleum Industry Act (PIA) 2021, which was gazetted on August 27, 2021, and approved by the President on August 16.

“In line with Section 167, the third and fourth schedule of the PIA 2021, the Nigerian Midstream & Downstream Petroleum Regulatory Authority is mandated to determine the Domestic Base Price (DBP) and the marketable wholesale price of natural gas supplied to the strategic sectors,” he said.

He clarified that regulations that take these additional factors into account will be used to set the Domestic Base Price at the marketable gas supply point under Section 167 (1) and other PIA provisions.

According to Mr. Ahmed, the price of natural gas needs to be at a point where upstream producers are willing to supply enough natural gas for the domestic market.

“The price shall not be higher than the average of similar natural gas prices in major emerging countries that are significant producers of natural gas, lowest cost of gas supply based on three-tier cost of supply framework and market-related prices tied to international benchmarks.

“Accordingly, after due consultation with key stakeholders and taking into cognizance the provisions of the PIA, as well as the gazetted Gas Pricing and Domestic Demand Regulations, the NMDPRA hereby establishes the Year 2024 Domestic Base Price as USD 2.42 / MMBTU and wholesale prices of natural gas in the strategic sector,” he said.

The agency expressed gratitude to investors in the domestic gas market and reaffirmed its commitment to expanding the domestic gas market.

“As we diligently implement all the provisions of applicable regulatory frameworks, we thank and appreciate all of the investors in the domestic gas market sector and assure you of the Authority’s commitment to continuously ensure transparency, deepening of the domestic gas market, and creating an investor-friendly business environment,” he continued.