BY MADUABUCHI EFEGADI
Domestic demand for Liquefied Petroleum Gas (LPG), or cooking gas, in Nigeria has shot up significantly in the last 14 years, from about 60,000 metric tonnes in 2007 to over 1,000,000 metric tonnes as of 2020, making Nigeria one of the fastest-growing LPG markets in the world.
The rise in domestic consumption of LPG presents huge business opportunities, but the country has yet to tap into these opportunities, according to experts in the gas value chain.
The experts say that despite being awash with gas, Nigeria needs to build institutional capacity to drive and sustain its gas transition, which is critical to attaining value and wealth advancement.
They also emphasise the need to drive investments in the gas industry through liquidity pools like the capital markets, bonds and PFAs, as well as exploring a myriad of financing options to provide funding for the nation’s gas infrastructure projects.
Though Nigeria is Africa’s top gas producer, the Nigerian Gas Association (NGA) said the country’s gas-to-power drive faces numerous challenges. These include capital intensity, under-investment, delayed delivery of planned gas infrastructure, and poor pipeline network.
Others are lack of cost-reflective tariffs and huge debts in the power sector, lack of clear gas fiscal terms for PSCs, and full implementation of the Petroleum Industry Act (PIA).
In 2020, the African Energy Chamber forecast that the global gas market fundamentals would remain loose on the back of Covid-induced demand and continued high supply of Liquefied Natural Gas (LNG) before prices tighten significantly as LNG demand growth will outpace liquefaction capacity due to more delays in project sanctioning. The forecast notably pointed to a tight LNG balance between 2023 and 2025, and along with it, a price spike.
But Olalekan Ogunleye, deputy managing director of Nigeria NLNG Limited, sounds optimistic.
Speaking recently at the 2nd West Africa LPG expo and NLPGA summit, Ogunleye said NLNG, collaborating with regulators, partners and industry players, would grow Nigeria’s domestic LPG market and bring cleaner energy to the citizens.
Nigeria LNG Limited (NLNG) about two years ago began a 100-percent production and supply of its Liquefied Petroleum Gas (LPG) to the domestic market to support the growth of LPG utilisation in the country. Also, the gas liquefaction company increased its LPG footprint through the start of domestic propane delivery in September 2021, charting a path for future deliveries.
Ogunleye said through the supply of LPG, NLNG prioritised the supply of clean energy in Nigeria while working collaboratively with the government to grow LPG consumption as part of the national journey to a clean energy future. According to him, a significant stimulus to domestic LPG was the federal government’s declaration of the “Decade of Gas” and the support of regulators and industry stakeholders.
Nigeria’s President Muhammadu Buhari had in March last year declared January 1, 2021 to December 31, 2030 as “The Decade of Gas Development for Nigeria”, an initiative designed to ensure Africa’s biggest oil producer can take advantage of the global energy transition.
Ogunleye said the declaration had created an enabling environment for investment and deliberate actions designed to ensure that Nigeria takes advantage of the global energy transition while monetising the country’s extensive gas reserves.
“Since the start of the domestic LPG supply scheme in 2007, NLNG has consistently increased both its reserved volumes for the domestic market and actual LPG volumes supplied,” Ogunleye said.
“NLNG intends to maintain this steady growth and supply contribution to the domestic market, consistent with its vision of helping to build a better Nigeria. Deliveries continue to be made through NLNG’s chartered LPG vessel, entirely dedicated to delivering the product to Nigeria to underpin the scheme and ensure a steady supply of products without disruption,” he said.
Ogunleye said NLNG has made a significant economic impact on business development and the creation of employment opportunities. That the gas liquefaction company’s shareholders, through its board, have shown a strong commitment to the growth of the DLPG scheme through consistent increase in reserved LPG volumes for the domestic market.