Nigeria Shifts Gas Market Toward Exchange-Based Trading Model

Nigeria is set to overhaul its natural gas market by adopting an exchange-based trading model. This move aims to increase transparency, attract foreign investment, and improve price discovery in the sector.

The current bilateral system has led to pricing inefficiencies, disputes over contract enforcement, and a lack of liquidity that discourages new entrants. By transitioning to an exchange-based model, Nigeria seeks to create a reliable reference price for natural gas that reflects real-time supply and demand dynamics.

The Securities and Exchange Commission of Nigeria, alongside the Nigerian Upstream Petroleum Regulatory Commission, is developing the regulatory framework to govern the new exchange. This includes implementing strict margin requirements and clearinghouse mechanisms to guarantee trade settlement.