Nigeria is known mainly as an oil producer but shifting the emphasis to natural gas is necessary if the country is ever to realise its ambitions for industrialisation.

The plans by Africa’s richest man, Aliko Dangote, to build a 500,000 barrels per day oil refinery, petrochemical plant and fertilizer complex, hinges on one key component ; the availability of cheap natural gas in Nigeria.

Analysts say meeting and boosting the domestic demand for gas will replicate a thousand Dangote’s and set Nigeria on the path to an industrial revolution.

This is because the nation’s abundant and cheap natural gas can power numerous industrial parks, where companies can set up major manufacturing complexes, employing millions of Nigerians.

The power of natural gas to transform societies can be seen in diverse places in the globe, from Qatar to China and the USA, where the shale gas revolution has led to a manufacturing renaissance.

Nigeria has however yet been unable to exploit this competitive advantage in Africa, even as other nations on the continent are beginning to discover significant gas resources of their own.

One example of the ability of a combination of industrial parks powered by cheap electricity to transform society, is Chinese company, Foxconn’s Longhua factory campus in Shenzhen – where 300,000 employees make components for IPhones, Sony PlayStations, and Dell computers.

Foxconn Technology Group (one company) as a whole employs more than 920,000 Chinese workers across more than 20 factories in mainland China.

In Nigeria, the shortage of gas is making it impossible to set up such industrial parks which may have helped to lure some light manufacturing from Asian countries, where rising wages is leading to manufacturers moving some factories away from China to locations like Vietnam.

While domestic gas demand has grown in leaps, the government’s tight control of the sector means that supply has failed to catch up.

“Nigeria needs 11 billion scf a day to meet power demand and addressing the shortfall calls for a different strategy. We now need to look more for non-associated gas resources for dedicated gas development”, said Frank Edozie, senior special assistant to the minister of power, adding that gas is of national strategic importance.

The country currently produces about 1.5 billion scf per day, meaning there is a 86.3 percent gap between demand and supply.

David Ige, group executive director, gas-to-power, NNPC, said “the challenge of domestic gas utilisation is for the country to grow supply as rapidly as demand” adding that as a result of JV funding challenges, international oil companies (IOCs) are not delivering gas to their capacity.

Another impediment to domestic gas utilisation is finance. Wale Shonibare, managing director of UBA Capital, said the major impediment to domestic gas is the economics. “The economics has to be right. For a long time, gas economics in Nigeria did not work because of the tariff. There has to be an economic framework. The future is domestic sales of gas,” he said.

Otis Anyaeji, chief executive of Otis Engineering, says that the entire banking sector in Nigeria does not have the capacity to play in the gas infrastructure.

Anyaeji says government needs to adopt policy-based financing for gas projects and infrastructure, adding that there is need to bring in state governments into gas infrastructure development.

According to BusinessDay Research and Intelligence Unit (BRIU), between 2003 and 2012, domestic gas utilisation grew  by 103 percent and accounted for 79 percent of total gas produced in the first nine months of 2013 as shown in the statistical data made available by the Nigerian National Petroleum Corporation (NNPC).

In 2012, gas utilised accounted for 77 percent of overall production. In the first nine months of 2013, an aggregate of 1,615.79 billion cubic feet of natural gas was produced with 79 percent of the quantity utilised.

An analysis of the supply chain as conducted by BusinessDay Research and Intelligence Unit, (BRIU) revealed that 33 percent of gas utilised was sold to third parties, 30 percent was for re-injection purposes for enhanced oil recovery, while 12 percent was sold to the NGC for power generation and 10 percent was for LNG.

Out of 4GW optimum power capacity in Nigeria today, 3.1GW is powered by gas.

“We have to drive internal demand for gas in Nigeria by removing the bottlenecks holding back supply,” said an oil industry source speaking to BusinessDay.

“Mexico is transforming its economy right now by reforming its oil sector. There is no reason why it cannot be done here.”

Nigeria has the world’s ninth-largest proven gas reserves at 188 trillion cubic feet (tcf) and potential gas reserves of 600 tcf.