The Russia-Ukraine Crisis and a Lost Opportunity for Nigeria -By Ayodeji Olatubora

The Russia-Ukraine Crisis is a long lost opportunity for Nigeria to increase foreign exchange earnings. Russia is the largest supplier of gas to Europe. Russia, with the largest gas reserve in the world produces about 17% of global natural gas and supplies about 30-40% of the gas consumed in Europe through a network of pipelines (The Nord Stream 1 & 2) running under the Baltic Sea from Russia to Europe through Germany. The Nord Stream 1 is owned and operated by Nord Stream AG (whose majority shareholder is the Russian state company, Gazprom), while Nord Stream 2 (an $11 billion Baltic Sea pipeline project, which will link western Siberia to Germany and double the existing Nord Stream 1 pipeline’s capacity) is owned and planned to be operated by Nord Stream 2 AG, which is a wholly owned subsidiary of Gazprom

Germany has now taken an economic risk by imposing sanctions on the pipeline, which represents a threat to energy security, as Germany and other European counterparts’ depend largely on Russian Gas. In fact, the German Chancellor, Olaf Scholz, in reaction to Russia’s invasion of Ukraine and Vladimir Putin’s declaration of the Donbas Region of Luhansk and Donetsk as independent Republics, suspended certification of Nord Stream 2 on 22 February 2022.

It’s quite unfortunate that Nigeria would not be cashing in on this looming energy crisis. Nigeria is the 10th largest gas reserve country in the world. If Nigeria had leveraged on the potentials in the gas subsector of the Energy industry, we would have had structures in place to fight for the world’s gas market share with Russia. However, Nigeria lacks critical infrastructure to supply Europe. For Nigeria to take gas to Europe, it would have to build a network of pipelines across the Trans-Saharan Region from Algeria and Morocco. This network of pipelines would have to run through the Northernmost part of Nigeria and connect with Niger. It’s a lost opportunity at potential revenues from gas.

Nigeria has also missed out on oil earnings due to insufficient and inefficient production capacity. Certainly, it’s expected that crude oil and the refined fuel sector is not target of sanction from the US, even as the US, UK and Europe, continue to import crude oil from Russia. In fact, recently, about 700,000 barrels of Russian crude, worth about $60 million left for the US Ports. The US, UK and European patronage of Russian crude makes it quite indispensable.

With a developed oil reserve infrastructure and production capacity, the country would have filled major gaps in the oil world. Nigeria holds about 37 billion barrels of proven oil reserves (10th highest in the world) but produces less than 2 million barrels or thereabout per day.

An aggregate of problems ranging from the fiscal and legal regime fashioned by Government to foreign investment in the oil industry, amidst vandalism, militancy, armed conflict and theft of oil resources in the Niger Delta have hamstrung oil production.

Ayodeji Olatubora is an Attorney, a Development and Policy Professional and a Public Affairs Analyst, and can be reached via ayodejiolatubora@gmail.com