China’s Surging Domestic Gas Production Threatens Nigeria’s LNG Export Dreams
Nigeria’s liquefied natural gas export revenues face a steep decline as China dramatically ramps up domestic natural gas production, fundamentally reshaping global LNG demand forecasts and threatening West African producers’ growth plans.
In a development that could rewrite global gas trade patterns, China produced 22.1 billion cubic meters of natural gas in November 2025, representing a 7.1 percent year-on-year increase driven by faster-than-expected shale gas production ramp-ups in the Sichuan Basin. Energy analytics firm Kpler now projects China’s total 2025 production will reach 263 billion cubic meters, climbing to 278.5 billion cubic meters in 2026, primarily fueled by expanding shale gas operations in the Sichuan and Shanxi basins.
This surge in domestic production marks a dramatic turnaround for China, which less than a decade ago struggled to commercialize shale gas extraction due to geological complexities that differ significantly from U.S. basins. State oil and gas majors are now pumping record volumes and announcing new discoveries across the shale patch, reducing the nation’s dependence on imports.
The implications for Nigeria are severe. China imports petroleum gas, including LNG, from Nigeria, making it a crucial market for West African producers. Nigerian entities like the NNPC have actively pursued Asian markets, with major deals planned for large-scale projects such as the Ogidigben Gas Revolution Industrial Park. However, China’s LNG imports fell to their lowest level in six years in 2025 after twelve consecutive monthly declines, with only a modest year-end rebound insufficient to reverse the downward trend.
Kpler predicts Chinese demand for LNG will decline further in 2026, with shale gas production removing approximately 600,000 tons of LNG demand and reducing total imports to 73.9 million tons. While this volume appears modest compared to the United States’ 100 million tons of exports last year, it signals a troubling trend for producers who have relied on China as the ultimate demand driver.
Johnson Chukwu, Group Managing Director of Cowry Asset Management, warned at the firm’s Quarterly Economic Discourse that Nigeria’s heavy reliance on China for trade exposes the country to serious vulnerabilities. Data from the National Bureau of Statistics indicates China remains Nigeria’s highest trading partner on the import side, with gas oil, motor spirit, and petroleum oils among the most traded commodities.
Compounding the challenge, pipeline gas flows into China are expected to increase substantially in 2026. Imports via Russia’s Power of Siberia pipeline alone could rise by 8 billion cubic meters compared to 2025, driving an overall 8 percent increase in pipeline imports to a total of 80.7 billion cubic meters. Meanwhile, China has halted imports of U.S. liquefied gas amid ongoing tariff disputes between the two nations, though Russia is exporting record volumes to its neighbor from two sanctioned LNG facilities.
The projected decline in Chinese LNG demand threatens to interfere with new capacity addition plans globally and could depress prices, shrinking producers’ profit margins. Many analysts had anticipated an oversupplied LNG market by 2030 due to planned capacity additions from top exporters, particularly the United States and Qatar, but China’s production surge accelerates this timeline and intensifies competitive pressures.
For Nigeria, which sits on natural gas reserves estimated at more than 600 trillion cubic feet, the challenge is particularly acute as the country seeks to monetize these vast resources through both domestic projects and international exports. The NNPC is advancing multiple gas initiatives, including the Nigeria-Morocco Gas Pipeline spanning 13 West African nations, but success depends heavily on stable demand from key markets like China.
While China will continue increasing domestic production as part of Beijing’s strategy to reduce energy import dependence, analysts note this reduction will be gradual and eventually reach its limits. Price dynamics will ultimately drive import decisions, and there are other countries with solid demand for liquefied gas, especially if prices decline due to increased supply or reduced Chinese demand. However, the immediate impact on Nigeria’s LNG export potential and revenue forecasts remains a significant concern for policymakers and industry stakeholders.
Source: orientalnewsng.com
