Unlocking nigeria’s compressed natural gas potential: A guide for aspiring entrepreneurs.

By Faridat Salifu

Nigeria, boasting Africa’s largest natural gas reserves with over 200 trillion cubic feet of proven deposits, is setting the stage to scale its compressed natural gas (CNG) industry.

In a recent move, the federal government approved N36 billion to convert 30,000 vehicles to run on CNG, signaling an open door for business-minded individuals looking to invest in the cleaner shift.

Primary CNG processing is led by the Nigerian Gas Company (NGC), which operates key facilities in Delta, Rivers, and Lagos states. Upstream giants like Shell, Total, and Chevron, working in partnership with the Nigerian National Petroleum Corporation (NNPC), are pivotal in driving Nigeria’s CNG output.

Despite these significant players, the potential to grow local production and distribution remains high, as Nigeria is still in the early stages of harnessing its extensive gas reserves.

Nigeria’s limited pipeline network and virtual pipeline systems require specialized tube trailers for CNG transportation, a setup more common in the South-South and Southwest regions.

This structure, known as the “Mother-Daughter” station model, sees CNG compressed at primary “mother” stations and distributed to smaller “daughter” stations. For prospective investors, this reliance on a fragmented infrastructure could signal areas ripe for logistical innovation.

Storage challenges continue to constrain Nigeria’s CNG sector, with only a handful of major storage facilities operated by companies such as NIPCO and Green Gas Limited.

With facilities located in Lagos, Port Harcourt, Benin City, and Ibadan, the current storage capacity is limited, and expanding it will be essential to meeting rising demand.

Leading the charge in CNG storage and distribution are companies like NIPCO Plc, Green Gas Limited, Shell Nigeria Gas, Total Nigeria, and Axxela Limited.

This limited pool of players hints at an undersaturated market, opening up opportunities for new entrants to set up CNG retail outlets, distribution networks, or storage solutions to capture unserved areas.

From CNG vehicle conversion centers to retail stations, equipment supply, fleet conversion services, and logistics, the CNG sector in Nigeria offers multiple entry points.

Currently, over 7,000 vehicles in Nigeria run on CNG, with adoption growing among commercial fleets and public vehicles. Fleet conversion services and CNG equipment supply represent immediate and scalable opportunities.

There’s also room in the market for trading-related businesses, including bulk CNG purchasing, equipment importation, technical services, training programs, and certification services.

For businesses capable of managing retail distribution or providing technical expertise, these avenues provide viable options to capitalize on growing interest in CNG.

Despite safety concerns associated with fake CNG installations, CNG remains the safest and cleanest fuel option for vehicles. Its environmental benefits align with Nigeria’s climate commitments, fuel subsidy reduction goals, and job creation potential.

With its ability to reduce foreign exchange demand for imported fuel, CNG presents an attractive, locally-sourced alternative for Nigeria’s transportation sector.

The most immediate profit opportunities include establishing conversion centers, supplying CNG equipment, managing fleets, and setting up retail station franchises. Investors can also offer training programs, providing essential technical knowledge to support industry growth.

However, initial capital requirements, technical expertise, and infrastructure constraints are challenges that need addressing.

As government interest in natural gas utilization and climate-conscious practices increase, Nigeria’s CNG industry stands out as a promising space for sustainable business.

Success, however, requires foresight, from navigating regulatory compliance and infrastructure limitations to identifying strategic partnerships.

The potential returns in CNG are undeniable for entrepreneurs prepared to invest in a cleaner, more resilient future. For Nigeria’s forward-looking investors, now is the time to position themselves at the forefront of the country’s energy transformation.