Newsfront Online …Telling the Public as it is
…Fret over LPG supply instability, fear price hike
Key stakeholders in the midstream sub-sector of the oil and gas industry have appealed to the incoming administration not to jettison the Decade of Gas plan, as it holds great potential for the Industrialisation of the country.
This is coming as some have expressed fears that increasing demand for Liquified Petroleum Gas(LPG) also known as cooking fuel, which has widened supply gap may cause further price disruption in the country. Stakeholders who at the ongoing Nigerian International Energy Summit, in Abuja yesterday, called on the incoming government of Senator Bola Ahmed Tinubu to continue with the execution of the current decade of plan saying its a comprehensive plan that will help the country harness this largely untapped resources.
Managing director of the Nigeria Liquefied Natural Gas (NLNG), Dr Phillip Mshelbila, in his presentation said that time is fast running out for the country as the global push for energy transition intensifies. According to him, Nigeria cannot afford a disruption in the Decade of Gas plan now. He said time is running out as the social acceptability of gas is fast waning.
In a related development, the executive secretary, Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM), Mr Bassey Essein, in a chat with our correspondent said, data is showing exponential rise in consumption which currently is leveling up to about 1.8 million metric tons.
Essien noted that this is far above about 150,000 metric tons as at 2007. LEADERSHIP reports that about 50-55 per cent of LPG consumed in the country is imported.
This, he stressed, was the reason for wide cost variance occassioned by exchange rate volatility, multiple taxes, scarcity of foreign exchange, among others. He said, the Nigerian Liquified Natural Gas(NLNG) Limited, though has provided a significant supply support, however, the volume is not enough to satisfy local consumption.
Essien also blamed lack of investment in infrastructure as another issue affecting the domestic supply. He said, although the price of cooking gas was still high, when compared to the price sold last year, but had remained stable since the beginning of the year.
According to him, the source of LPG for sometime now has been predominantly from the Nigeria LNG and has never met the demands. This, he added, is because of the supply- demand gap and market dynamics and all these work in concert to affect the price.
He called for more investment in gas processing sector in the country and urged the Federal Government to grant investors the necessary incentives that would encourage such. “Remove taxes and tariffs on gas. Grant other incentives that attract investors. The penalty for gas flaring l learnt has been increased. Maybe it will work because if a company recognises the penalties paid on these, it might encourage the worthwhile investment in gas processing,” he added.
However, the NLNG said it is primarily an export company that produces 22 million metric tons MTPA of Liquified Natural Gas (LNG) and 5 MTPA of Natural Gas Liquids (NGLs). The company sees its contribution as significantly enhancing domestic LPG market, and admitted that the price of LPG in the domestic market is dependent on several market factors, including the forces of demand and supply.
On the supply side, NLNG, said it plays a pivotal role in the Nigerian domestic LPG market in line with the commitment it made to help deepen the market. Our correspondent gathered that the company recently increased the volume of its annual commitment to the market from 350,000 to 450,000 metric tons, which is about 100 per cent of its Butane production.
Butane gas is less volatile and is, therefore, suitable for cooking. In 2020 alone, NLNG supplied over 80 per cent of its LPG sales (Butane/cooking gas) to the Nigerian market. By committing 100 per cent of its Butane production, NLNG has prioritised the domestic market, thus realising its domestic supply target safely.
(leadership.ng)
