The Federal Government has taken a decisive step to revolutionize Nigeria’s energy sector. On Thursday, it officially issued the country’s first-ever Gas Trading Licence.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) awarded the licence to JEX Markets Limited during a ceremony in Abuja.
This authorization empowers JEX Markets to operate a Clearing House and Settlement system. This critical financial infrastructure guarantees payments and standardizes transactions between buyers and sellers, addressing long-standing trust issues in the market.
Africa’s Largest Reserves, Underutilized
Nigeria holds the largest gas reserves on the continent, boasting over 209 trillion cubic feet (TCF) of proven reserves and an estimated 600 TCF in potential reserves. Despite this wealth, the domestic market remains largely underdeveloped.
- Opaque Pricing: A lack of clear market rates helps sustain inefficiencies.
- Contract Breaches: Poor sanctity of agreements discourages investment.
- High Costs: Transaction costs remain prohibitively high.
- Limited Access: Restricted access to gas supply hampers industrial progress.
These inefficiencies are frequently cited as the root causes of stalled industrial projects, erratic gas-to-power supply, and the slow pace of the country’s energy transition.
Transparency Through Technology
Speaking at the event, NMDPRA Chief Executive Farouk Ahmed described the licence as the dawn of a technology-enabled marketplace.
He noted that the move complies with Section 159 of the Petroleum Industry Act (PIA) 2021, which mandates a regulated framework for wholesale gas transactions.
The JEX platform is designed to facilitate:
- Transparent price discovery.
- Automated real-time trading.
- Reliable clearing and settlement.
“This licence will unlock new opportunities and finally address pricing opacity, transaction bottlenecks, weak contract sanctity, and low investments,” Ahmed stated.
Access, Dependability, and Affordability
The Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, highlighted that the initiative aligns with President Bola Tinubu’s “Renewed Hope Agenda.”
Ekpo outlined three immediate impacts the new framework would deliver:
- Access: Only “fit-and-proper” participants will be admitted, ensuring credibility.
- Dependability: Standardized reporting and regulated settlements will reduce counterparty risks.
- Affordability: A competitive trading environment will lower costs for industries and the power sector.
“The Gas Trading Licence introduced today is decisive… paving the way for a new, regulated market where reliable traders will feel safe doing business,” Ekpo said.
From Commodity to Financial Asset
Emomotimi Agama, Director-General of the Securities and Exchange Commission (SEC), characterized the licence as a pivotal shift. He described it as Nigeria’s evolution from a crude-oil-dependent economy to a “financialised gas economy.”
Agama emphasized that the Clearing House authorization ensures risk management and investor protection.
“With this platform, gas will no longer be just a commodity,” Agama noted. “It becomes a tradable financial asset that attracts capital, spurs infrastructure investments, and diversifies our economy.”
Protecting the Infrastructure
A stable market requires physical security. Representing the National Security Adviser (NSA), Goodluck Ebelo assured stakeholders that protecting gas infrastructure remains a priority.
Ebelo promised that the successful security framework currently used to fight oil theft will extend to the new pipeline systems supporting this trading environment.
“Nigeria’s gas future is secure, and we will continue to defend it with every necessary resource,” Ebelo affirmed.
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