Performance Evaluation of Natural Gas Value Chain in Nigeria

Abstract

Abstract Natural gas resource abounds significantly in Nigeria. Thus, the description of Nigeria as a prolific gas province with pockets of oil is not conjectural. However, little effort in terms of gas exploration and production is evident. This has made the gas sector a focal point with respect to resource development for sustainable energy and national development economy. This paper evaluates natural gas value chain in Nigeria. The purpose is to analyze the relative technical efficiency of the value chain of natural gas industry in Nigeria from 2013 to 2017. Data Envelopment Analysis (DEA), a deterministic tool for assessing the efficiencies of decision-making units, provides the fundamental framework applied to analyze the gas industry value chain in this paper. In addition, in order to incorporate data uncertainty, we adopted the uncertainty DEA plus tool to show that for the period under consideration, none of the gas value chain sector is technically efficient, albeit, in a relative sense. The midstream gas sector is the least efficient, while the downstream export gas sales is the most efficient. The DEA results suggest that for Nigeria to meet her economic growth aspirations and become an attractive gas-based industrial nation, pragmatic policy framework to maximize value creation across the gas chain sectors is required. In addition, harmonizing the domestic gas market and the export gas market will bring about value creation for sustainable national development.