Gas Production By China Truncates Nigeria’s LNG Export Opportunities

Nigeria’s gas export to China is expected to crash this year following China’s ambitious groundbreaking project in boosting domestic natural gas production.

A major LNG consumer—and importer—the country has been key in Liquified Natural Gas (LNG) demand forecasts and these forecasts will need to be revised.

Less than 10 years ago, China was struggling to establish its domestic gas production, particularly in shale formations. China’s shale geology is different from the U.S. basins, and energy companies were finding it difficult to get commercial production going. Now, China’s state oil and gas majors are pumping more gas than ever and announcing new discoveries in the shale patch.

In November last year, China produced 22.1 billion cum, which was a 7.1 per cent increase on the year, Kpler reported this month citing official production data.

The increase was driven by “faster-than-expected shale gas ramp-ups in the Sichuan Basin.” Based on that data, the energy analytics firm expects China’s total for 2025 to reach 263 billion cubic meters, rising to 278.5 billion cubic meters this year, again thanks to growing shale gas production in the Sichuan and Shanxi basins.

As with oil, rising domestic production would inevitably affect imports, even as China increasingly relies on natural gas for emission-reduction purposes.

Report shows that China imports petroleum gas (including LNG) from Nigeria, with Nigeria being a significant, though sometimes fluctuating, supplier, especially as China diversifies its energy sources and Nigerian entities like NNPC actively seek Asian markets, with major deals also being pursued for large-scale projects like the Ogidigben Gas Revolution Industrial Park.

While Nigeria’s crude oil also goes to China, gas exports are substantial, making it a key product in their bilateral energy trade, despite broader shifts in global LNG sourcing.

China imports gas from Nigeria, a trade relationship that is growing through direct shipments and major joint industrial projects, supported by Nigerian government initiatives to attract investment, according to report by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

Last year, analysts raised concerns over Nigeria’s sustained reliance on the Country’s imports, especially in oil and gas.

According to analysts the country’s current import structure exposes it to serious vulnerabilities.

The group managing director of Cowry Asset Management, Johnson Chukwu, at the Cowry Quarterly Economic Discourse, themed ‘Thriving in a Volatile Economic Environment,’ warned of potential economic slowdown with such heavy reliance.

The 2025 first quarter Foreign Trade in Goods Statistics released by the National Bureau of Statistics (NBS) indicated that China remains Nigeria’s highest trading partner on the import side, followed by India, the United States of America, the Netherlands, and the United Arab Emirates.

The most traded commodities imported during the quarter were gas oil, ordinary motor spirit, petroleum oils and oils obtained from bituminous minerals, crude cane sugar meant for sugar refineries, and durum wheat (not in seeds).

Chukwu, said that a high volume of imports from China means that any disruption in China’s supply chains, like those seen during the COVID-19 pandemic, could trigger a new wave of inflation and economic instability in Nigeria.

Last year, for instance, China booked higher domestic gas production and a rather substantial decline in LNG imports.

Import of liquefied gas last year fell to the lowest in six years after a string of 12 monthly declines in a row. Imports only rebounded at the end of the year but not enough to reverse the decline. Kpler has predicted that Chinese demand for liquefied natural gas is going to decline this year as well, with shale gas production removing some 600,000 tons of LNG demand, reducing the total to 73.9 million tons.

Now, 600,000 tons is not a whole lot in the context of a market where the United States alone exported over 100 million tons last year. However, it does serve as yet another indication of a trend in China to reduce its dependence on energy imports, which has implications for global energy commodity markets that have grown accustomed to relying on China as the primary driver of demand.

The projected decline in China’s demand for gas—and, by extension, LNG—may interfere with new LNG capacity addition plans and prices, thereby shrinking producers’ profits. It is these plans for a wave of new LNG supply, set to come online by the end of the decade, mainly from the top exporters, the United States and Qatar, that have prompted many analysts to expect an oversupplied LNG market by 2030 that would weigh on prices.

Then there is competition on the LNG market itself. China is no longer importing U.S. liquefied gas amid the two countries’ tariff spat that President Donald Trump launched as soon as he was sworn in.

But Russia is exporting record volumes to its neighbour, but these record volumes are not exactly massive. However, they come from two sanctioned LNG facilities, suggesting that, like oil and love, gas always finds a way as long as the price is right.

Growing Russian exports of LNG to China could also be a factor in LNG market forecasts, especially once the European Union’s total ban on Russian energy imports, meaning gas, comes into effect next year. Currently, the European Union is the largest buyer of Russian LNG; once the ban comes into effect, these flows will be redirected, and the likeliest new destinations will be China and India.

Meanwhile, pipeline gas flows into China are also expected to increase this year, further dampening demand for liquefied natural gas.

Imports via the Power of Siberia pipeline from Russia alone could move higher by 8 billion cu m than in 2025, according to Kpler, driving an overall 8 per cent increase in pipeline imports to a total 80.7 billion cu m.

Pipeline gas imports from Central Asian countries, meanwhile, are expected to decline by 4 billion cubic meters in 2026, driven by stronger domestic demand that will prompt those countries to retain more gas at home.

China will continue ramping up its domestic natural gas production. Reducing dependence on energy imports is a priority for Beijing.

Yet this import reduction will be gradual, and it will sooner or later reach its limits. Until then, it is price that will drive import decisions, and the impact that these decisions could potentially have on the global LNG market.

However, that impact is unlikely to be as major as the impact of oil demand trends in China.

The reason is that there are plenty of other countries with solid demand for liquefied gas—especially if prices move lower and stay there, whether thanks to new capacity that is boosting supply or thanks to lower Chinese demand driven by rising domestic production