The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has set an official natural gas base price. NMDPRA has established the Year 2024 Domestic Base Price as US$2.42 per million British thermal units (MMBtu).
The Authority published the base price via its official Twitter handle on April 1, 2024. The letter signed by the Authority Chief Executive, Farouk Ahmed, commended investors in the domestic gas market sector.
The Authority also assured them of its commitment to continuously ensure transparency, deepening the domestic gas market, and creating an investor-friendly business environment while implementing all the provisions of applicable regulatory frameworks.
According to the NMDPRA, the Petroleum Industry Act (PIA) of 2021, assented to by the President on August 16, 2021, and gazetted on August 27, 2021, provides a clear regulatory framework for the determination of a market-based pricing regime for the domestic gas market in Nigeria.
So, in line with Section 167, the Third and Fourth Schedule of the PIA 2021, the Nigerian Midstream & Downstream Petroleum Regulatory Authority (NMDPRA) is mandated to determine the Domestic Base Price (DBP) and the marketable wholesale price of natural gas supplied to the strategic sectors.
The NMDPRA noted that the gas base price must be level to voluntarily bring sufficient natural gas supplies for the domestic market by the upstream producers. Also, the price shall not be higher than the average of similar natural gas prices in major emerging countries with significant producers.
Meanwhile, the lowest gas supply cost is based on a three-tier cost of supply framework and market-related prices tied to International benchmarks.