Nigeria needs more LPG producers as demand outstrips supply
Stakeholders in the Liquefied Petroleum Gas (LPG) sector have called for an increased supply of the commodity in order to check rising demand and sharp practices by some operators.
Indeed, Nigeria’s Liquefied Natural Gas (NLNG) has been the major supplier of LPG to the country, having devoted all its production to the domestic market. However, rising local demand continues to outstrip supply, necessitating new supply chains to buffer the present arrangement.
Currently, operators noted that LPG supply remains inadequate due to non-functional refineries, inadequate natural processing and difficulties in importation. These concerns have led to a high demand outstripping supply and also created sharp increases in the price of LPG.
The Managing Director, NLNG, Phillips Mshelbila during his opening remarks at the Nigeria Liquefied Petroleum Gas Association (NLPGA)/Nigeria Liquefied Natural Gas (NLNG)/Nigerian National Petroleum Company (NNPC) Limited commemoration of the 15th anniversary of the domestic LPG supply obligation programme in Lagos yesterday, noted that feed gas supply and gas gathering systems faced major challenges in recent times.
Though the LPG value chain is straightforward, he noted that there are gaps that exist, which needed to be bridged in a concerted manner.
“With regards to supplying – the gas producers, importers and refineries, need to invest in a reliable and steady stream of supply to the market. This would intentionally spark commitment along the chain, including vertical integration.
NLNG is doing this through its further investment in Train 7, which when completed will add about 35% to its current capacity, subject to gas supply and gas quality. There are other domestic producers of LPG that would need to make investments to enable their product to become available to the domestic market, rather than exporting it.
“NLNG intervened in 2007 to ease the challenges around the availability of LPG in Nigeria and since then has consistently made the product available in the domestic market. It has accepted buyers of all sizes thus creating economic opportunities for Nigerian companies leading to increased investment, improved local competence, creation of jobs, and increased economic activities within the country”, he added.
The NLNG MD explained: “Presently, due to floods in the operational sites of NLNG’s feedgas suppliers, there has been reduced gas supply with upstream suppliers’ declarations of force majeure.
“While NLNG has in turn declared force majeure based on provisions in relevant LNG agreements, our own facilities remain unaffected and our capacity to produce LPG is intact.
“We continue to load and ship LPG to the domestic market. “Therefore, we reassure Nigerians of our ongoing operations in the immediate term and look forward to an urgent return to normalcy.
“Prior to the flooding, we were contending with the unrelenting effects of crude oil theft, which directly and severely impacted the supply of associated gas to our plant by the upstream producers.
“We recognize the strides being made to address this by the Government and its agencies and hope that this will soon translate into improved gas supply to our plant in Bonny,” Mshelbila added.
Continuing, the NLNG helmsman added “We continue to load and ship LPG to the domestic market. Therefore, we reassure Nigerians of our ongoing operations immediate and look forward to an urgent return to normalcy.
Prior to the flooding, we were contending with the unrelenting effects of crude oil theft, which directly and severely impacted the supply of associated gas to our plant by the upstream producers.
“We recognize the strides being made to address this by the government and its agencies and hope that this will soon translate into improved gas supply to our plant in Bonny.”
Speaking earlier, the former Special Assistant to President on Petroleum Matters, Alhaji Ja’afaru Paki, stressed that to improve LPG production, sustain supply to the domestic market and increase utilization, there is need for NLPGA to improve production and intensify advocacy on infrastructure and fiscal incentives.