NMDPRA Licenses the First Gas Trading Platform: Legal and Commercial Implications

Key Features and Regulatory Framework
The new platform marks a fundamental shift from opaque bilateral agreements to a structured, transparent marketplace for wholesale gas trading. Its core objective is to establish a credible, market-driven Nigeria Gas Price Index, fostering fair pricing and confidence in the gas market. Key features include the standardisation of contracts, automated online trading, and a centralised clearing and settlement system to support settlement and materially reduce counterparty risk.

The Regulations envisage a gas exchange with digital inputs like an online screen-based trading system; real-time pricing, volumes surveillance capability; contract designs that increase liquidity and ensure fair, competitive price discovery; and daily trade data. The Regulations also require that require a clearing house to have settlement procedures, including netting and novation, and a settlement guarantee fund.

The platform will be jointly regulated by the NMDPRA and the SEC. This dual oversight is designed to embed capital markets type integrity, investor protection, and risk management principles into the gas market.

Operational Framework
The framework currently operates through JEX Markets Limited, which holds the pioneer licenses for both the gas trading platform and the clearing house and settlement system. While JEX Markets Limited is the inaugural operator, the long-term objective is to attract more participants to increase liquidity, enhance transactional transparency, and ensure reliable price discovery. The Regulations permit the NMDPRA to license gas exchanges and clearing houses that meet the regulatory conditions for such operations with the issuance of Gas Trading Licences and Clearing House and Settlement Authorisations.

Commercial Implications and Opportunities
The new platform creates significant opportunities across the value chain. For gas producers and large-scale consumers (for example, power plants, industrial users), it offers pricing and volumes transparency, mitigates counterparty risks, and provides a pathway to a more liquid, transparent market as participation deepens. For infrastructure investors, traders and financial institutions, the standardisation should improve the bankability of projects, creating opportunities for market-making, de-risked projects which are underpinned by a credible Nigerian gas price index.

Conclusion
The success of the platform will require the onboarding of a critical mass of buyers and sellers. In the near term, we expect regulators and the platform operator to prioritise onboarding participants, develop robust pricing data and standardised contracts, and demonstrate reliable settlements.

If execution is sustained by the NMDPRA, SEC, operators and users, the platform will be an important tool for delivering Nigeria’s Decade of Gas objectives, strengthening energy security and industrial competitiveness, and positioning Nigeria as a regional hub for gas trading and price formation. All stakeholders must also continue to commit to the security of physical gas infrastructure.

This legal alert examines the platform’s key features, its legal and commercial implications, and the strategic considerations for market participants.

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Should you have any questions regarding the information in this legal alert, please do not hesitate to contact Oghogho Makinde.

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Contributor
Aaaron Alasa – Associate