The quest to bridge gas deficit, value chain
Given the current global drive to transit from other forms of fossil fuels to cleaner energies like Liquified Natural Gas, governments in various parts of the world are supporting investments in LNG production for home, automobile and industrial use.
In Nigeria, with the removal of subsidy on petroleum products (a policy geared towards ultimately stabilising the economy) and the attendant increase in pump price of fuel and consequential rise in the cost of production, transportation as well as consumer goods and services, gas becomes an essential alternative energy source for national economic survival.
Sadly, despite Nigeria’s huge gas reserves; 9th highest in the world with 203.16 trillion cubic feet (TCF) as of June 2020, bulk of it remains unharnessed and flared even as the nation bears the strain of insufficient gas for the domestic and export markets. Notwithstanding being one of the largest exporters of Petroleum Gas, Nigeria ironically still ranks as one of the biggest importers of gas in the world, with gas ranking 34th Nigeria’s most imported product by 2021.
According to data obtained from Nigeria Midstream Downstream Petroleum Regulatory Agency (NMDPRA), out of the 1.4 million tonnes of gas consumed in Nigeria in 2022, 800,000 tonnes were imported, despite Nigeria’s production potentialities and capacity. The direct consequence of this socio-economic contradiction is a cavernous consumer gas deficit which translates to exorbitant costs and undue stress on home, automobile and business owners in Nigeria.
With the heavy dependency on importation, the domestic market remains strained with high costs. Only last week, The President of the Nigerian Association of Liquified Petroleum Gas Marketers, Olatubosun Oladapo, alerted of imminent hike in gas prices in the country citing international prices, cost of vessels, forex scarcity and fall in the value of Naira as challenges.
Moreover, with the dependency on importation, the nation continues to forgo gains that would have accrued from local production including employment and business opportunities along the gas production, distribution and marketing value chain. This painful national irony has been traced to a lack of political will by past administrations to spur the required public and private sector prospecting, production and value-chain investments in the gas subsector.
A boost in local gas production will not only create opportunities in the value chain but will also essentially increase national export earning, eliminate importation and crash prices for home, automobile, business and industrial use thereby energizing national industrial and SME productivity across the critical sectors of the economy.
It is against this backdrop that the steps being taken by President Bola Ahmed Tinubu to reposition and spur public and private investments in critical sectors of the economy including gas production in Nigeria is commendable. This commitment is not only critically strategic for economic stability and growth but also for the wellbeing of Nigerians.
It therefore came as cheering news to Nigerians when President Tinubu, in line with his commitment, pledged support towards the establishment of Nigeria’s First Floating Liquefied Natural Gas (FLNG), the UTM FLNG.
The facility which is the brainchild of Mr. Julius Rone, the Group Managing Director of UTM FLNG, a subsidiary of UTM Offshore Limited targets an annual 1.5 million tonnes of Liquified Natural Gas (LNG) for export as well as 300,000 metric tonnes for domestic market; a venture aimed to lowering and stabilizing price of gas while creating thousands of jobs and investment opportunities in Nigeria.
Presenting the FLNG Project to the President at Presidential Villa on Wednesday, July 5, 2023, Rone commended the Tinubu administration for its commitment in providing access to clean, accessible, affordable, available and abundant energy for all Nigerians. From the production projections, the 300,000 metric tonnes of LPG production which will be dedicated to domestic market (DLPG) represents 25% of national demand which will go a long way to stabilize the price of cooking gas in addition to its possible use for auto gas and other industrial purposes among others.
In addition, the facility will provide about 7,000 jobs in addition to value creation along the LPG Supply Chain. Part of the gains is that the facility will also address deforestation, help reduce mortality rate in Nigeria occasioned by smoke inhalation from firewood while reducing environmental hazards by eliminating flaring of associated gas in the country. Some of these gargantuan gains to be made by this project excites industry players who have also commended President Bola Tinubu for his commitment and support of his administration towards private sector initiatives in Nigeria, especially in the quest to palliate the challenging energy need in the country.
The success of the UTM FLNG project will not only be a credit to Dr. Rone and his team, but will also serve as a visible demonstration and unwavering commitment of President Bola Ahmed Tinubu’s will towards economic growth and wellbeing of our citizens. President Tinubu should therefore spare no thoughts and brook no impediments in ensuring that the UTM solution is effected no sooner than later.
Ndukwe of James Frost and Co, wrote
Get the latest news delivered straight to your inbox every day of the week. Stay informed with the Guardian’s leading coverage of Nigerian and world news, business, technology and sports.