By Sebastine Obasi
LAGOS—Expectations of a higher dividend from the Nigerian Liquefied Natural Gas, NLNG, have dimmed as the Federal Government’s share dropped by 65 percent, from as much as $1.04 billion in 2015 to $356 million in 2016.
This is the lowest share dividend accruing to the Federal Government in 10 years. The Federal Government recorded the highest share dividend in 2012, when it received $2.7 billion, followed by 2008, when it received $2.6 billion and 2011, when the sum of $2.5 billion was paid.
In the last 13 years, the sum total of share dividend paid by NLNG to the Federal Government amounted to $15.7 billion.
This year’s low dividend reflects the lower price environment in the global oil and gas industry caused by an oversupply of the commodity.
Furthermore, the low prices and weaker demand caused buyers to take a wait-and-see approach to long-term supply contracts, according to analysts.
Nigeria, the biggest natural gas exporter on the continent and fourth largest in the world, now faces increasing competition from other suppliers, including Angola, who was expected to return to the market in early 2016 after ceasing exports in 2015 due to repairs.
Following the relative stability seen in the market since the fourth quarter of 2016, it was expected that natural gas prices may have stabilized.
Also, the lower gas prices have resulted in greater demand for gas by new natural gas importing nations.
According to the International Gas Union, IGU, four new gas importers were added to the market in 2015 and one extra in 2016, leading to an expansion of the market.
The NLNG, according to stakeholders, remains a very valuable and efficient asset of the Federal Government.
The Federal Government, through, the Nigerian National Petroleum Corporation, NNPC, owns 49 percent shares in NLNG.
Other shareholders are Royal Dutch Shell, Total and Eni International, which own 25.6 percent, 15 percent and 10.4 percent respectively.