The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has commenced work on defining measurable conditions for the transition of the country’s domestic gas market towards a more commercial, willing-buyer, willing-seller framework.
The move is aimed at establishing when the domestic gas market will be sufficiently developed for transactions to operate with greater reliance on commercial contracts and less regulatory intervention.
Chief Executive of the Authority, Mallam Rabiu Umar disclosed this while speaking at the Decade of Gas Market Maturity Workshop.
Umar said the assessment of market maturity would be based on indicators including gas supply, market participation, infrastructure access, contract performance, payment discipline, availability of reliable market data and credible price signals.
The development comes as Nigeria’s domestic gas market continues to expand in supply, utilisation and infrastructure investment, while constraints around gas availability, infrastructure access, payment risks and contract performance continue to affect the market.
According to Umar, establishing a mature market would require coordinated action among producers, gas buyers, infrastructure operators, financial institutions, government and regulators.
He said the objective was to create a market in which investment could respond more confidently to demand, infrastructure would support efficient gas transactions and contracts would carry greater credibility as commercial activity expands.
The NMDPRA Chief Executive also indicated that the regulatory framework would evolve as the market develops, with intervention expected to reduce as the conditions for a functioning commercial market become established.
The proposed transition is significant because a willing-buyer, willing-seller model depends on participants having sufficient confidence that gas can be supplied, transported, paid for and contracted under predictable commercial terms.
For Nigeria, the test of market maturity therefore goes beyond increasing gas production. It also requires the infrastructure, payment systems, contractual arrangements, market information and pricing mechanisms needed to allow buyers and sellers to transact reliably.
The Authority’s work on defining measurable conditions is expected to provide a basis for determining how far the domestic gas market has progressed towards that model.