Canada’s burgeoning liquefied natural gas (LNG) export capabilities are poised to reshape global energy markets, particularly in Asia, raising concerns in Nigeria, a long-standing supplier to the region.
As Canada brings new projects online, its competitive entry into the Asian market could significantly challenge Nigeria’s ambitions for increased market share and potentially erode its existing foothold.
For decades, Nigeria has leveraged its vast natural gas reserves, the largest in Africa, to become a significant player in the global LNG trade.
The Nigeria LNG (NLNG) plant on Bonny Island has been a cornerstone of the nation’s energy strategy, supplying gas to Europe, Asia, and other destinations.
However, the global energy landscape is in constant flux, driven by geopolitical shifts, technological advancements, and the urgent need for energy security and diversification. Canada’s emergence as a serious LNG exporter represents one such seismic shift.
Canada, with its immense natural gas resources, predominantly in the Western Canadian Sedimentary Basin, has been working for years to establish itself as a major LNG supplier.
The recent completion and impending operationalisation of key projects, most notably the LNG Canada facility in Kitimat, British Columbia, mark a turning point. This facility, backed by a consortium of global energy giants, is strategically located on the Pacific coast, offering a direct and relatively short shipping route to energy-hungry Asian economies like Japan, South Korea, China, and India.
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Shell Plc has started exports from Canada’s first LNG project, helping to meet rising Asian demand and extending its position in the global LNG market.
“We very much see it as a very strategic location on the Pacific coast,” Cederic Cremers, Shell’s president of integrated gas, said in an interview. “It connects very cost-competitive upstream gas from British Columbia to growing Asian demand.”
A second production unit, known as a train, will start up later this year, and the 14 million-ton-a-year facility will reach full capacity in 2026, Cremers said.
Once both trains are online, Canada would rank eighth in global LNG exports, behind Nigeria, data compiled by Bloomberg show.
In 2024, almost half of Nigeria’s LNG exports went to Asia, with another third going to Europe and the remaining to the Americas and Middle East, according to data compiled by Bloomberg.
The new LNG plant at Kitimat on Canada’s west coast is relatively close to customers in East Asia and comes on stream ahead of new export plants in the US and Qatar, which won’t add substantial supplies to the market until next year at the earliest.
A further expansion is under discussion between Shell and its partners – Petroliam Nasional Bhd., PetroChina Co., Mitsubishi Corp. and Korea Gas Corp. – with a final investment decision likely next year, Cremers said.
Shell expects global LNG demand to grow 60 percent by 2040, led by Asia.
Read also: Shell expects 60% rise in global LNG demand in 15 years as Asia leads growth – Reuters
For Nigeria, the implications are multifaceted.
Asia has historically been a crucial growth market for Nigerian LNG. As European demand fluctuates and the continent increasingly looks to diversify away from Russian gas, competition in the Atlantic Basin is also intensifying. This makes the Asian market even more critical for Nigeria’s long-term gas strategy.
The NLNG Train 7 project, currently under construction, aims to boost Nigeria’s production capacity by 35 percent to 30 million tonnes per annum (mtpa), underscoring the nation’s intent to expand its global footprint. However, the timing of this expansion coincides with Canada’s aggressive market entry.
Analysts suggest that Canada’s entry will primarily impact pricing and market share.
“The additional supply from Canada, particularly given its geographic advantage to Asia, will inevitably increase competition,” says Ngozi Okoro, an energy economist based in Lagos. “Nigerian LNG will face pressure on pricing, and securing new long-term contracts in Asia might become more challenging. Buyers will have more options, leading to potentially more favourable terms for them.”
Nigeria’s challenges are not limited to new competition. The country has grappled with issues such as pipeline vandalism, security concerns in the Niger Delta, and regulatory uncertainties, which have at times hampered its ability to consistently meet production targets and attract new investment.
While efforts are underway to address these issues, they add a layer of complexity to Nigeria’s competitive stance against a reliable and well-resourced new entrant like Canada.
Experts said the global shift towards cleaner energy sources means that future LNG contracts will increasingly scrutinise the carbon intensity of production.
