NNPC Ltd captures greater market share with DES LNG shipments
Sopuruchi Onwuka
The Nigerian National Petroleum Company Limited (NNPC Ltd) is making significant strides in the global energy market, expanding its footprint in Asia with the commencement of Liquefied Natural Gas (LNG) shipments to Japan and China on a Delivered Ex-Ship (DES) basis.
This strategic move positions Nigeria as a key player in the international gas market, enhancing the country’s ability to capture a larger share of the rapidly growing energy demand in Asia.
Managing Director of NNPC Shipping Ltd, Mr. Panos Gliatis.
The national oil company successfully delivered its first DES LNG cargo to Futtsu, Japan June 27, using the 174,000m³ vessel Grazyna Gesicka. The landmark shipment marks NNPC’s entry into the Japanese LNG market, a crucial step in its broader strategy to become a reliable global energy supplier of choice.
Following the first DES cargo delivery, the company extended its reach to China, delivering another LNG cargo on a DES basis, further cementing its presence in the Asian market.
The DES model, an international commercial term that requires the seller to handle the shipping and insurance of goods until they reach the specified port, is a more complex and demanding system than the traditional Free on Board (FOB) method. However, it offers substantial advantages, allowing NNPC Ltd to assume greater control over the supply chain, enhance its value proposition to customers, and ultimately secure a more significant share of the global LNG market.
NNPC Ltd’s entry into DES shipping represents a pivotal shift in its LNG trading strategy. Since its first LNG cargo sale in November 2021, the company has traded over 20 cargoes into European and Asian markets on an FOB basis. The transition to DES is a deliberate move to capture more market share, as the DES model provides better financial returns and positions NNPC Ltd to play a more active role in the downstream segment of the LNG sector.
Speaking on the development, Mr. Dapo Segun, the Executive President, Downstream, emphasized the strategic importance of the DES system for NNPC Ltd. “The DES system, apart from being more financially rewarding, allows NNPC Ltd inroads into the downstream segment of the LNG sector and positions it to capture more market shares while building in-house capacity and ensuring that global customers are familiar with the NNPC Ltd brand,” he said.
The collaboration between NNPC LNG Ltd and NNPC Shipping Ltd has been instrumental in the successful execution of these DES shipments. NNPC Shipping Ltd, in particular, has strengthened its position as a world-class shipping provider in the LNG sector, with plans to expand its shipping portfolio, including owning vessels to provide greater flexibility for its clients.
Panos Gliatis, Managing Director of NNPC Shipping Ltd, outlined the company’s future ambitions, stating, “NNPC Shipping intends to build a shipping portfolio (including owned vessels) so that we can provide our sister company and other clients all the shipping flexibilities they need.”
Looking ahead, NNPC LNG Ltd, in collaboration with NNPC Shipping Ltd, is scheduled to deliver at least two more LNG cargoes to the Asian market on a DES basis by November 2024. With many more orders expected before the end of the year, NNPC Ltd is poised to solidify its role as a leading global energy supplier.
By adopting the DES model, NNPC Ltd is not only expanding its global market reach but also enhancing Nigeria’s position in the international energy market. This strategic shift is set to deliver significant benefits, including increased revenue, stronger brand recognition, and a greater share of the global LNG market.
