NLNG set to crash domLPG prices with supply glut

Sopuruchi Onwuka

Africa’s largest gas processing company, the Nigerian Liquefied Natural Gas (NLNG) Limited, has determined to take full responsibility in supplying the domestic market with natural gas liquids mainly used as cooking gas.

The company also warned the public to disregard some online advertisement announcing vacancies for its Train 7 Project positions and encouraging prospective victims to join WhatsApp groups created for the purpose of progressing such employment. The company said the publication is scammers’ decoy.

General Manager, External Relations & Sustainable Development, Mr Andy Odeh, stated on Thursday that the company’s board of directors approved the supply of 100 percent of the company’s LPG production to the Nigerian market.

The Oracle Today reports that the domestic liquefied petroleum gas (LPG) market demand is estimated at about 1.2 million tons per year, and the NLNG has capacity for production of 5.0 million tons per annum of NGLs. However, not all specifications of NGL can pass as cooking gas.

The approval entails therefore that all the propane and butane stripped from rich upstream gas would now be fed to the domestic LPG market. And the supply surge is expected to rebalance the market and achieve lower prices.

It would be recalled that acute supply deficits recently plunged the domestic LPG market into price crisis, leading to a spate of public outcry.

The NLNG remains the main source of stable LPG supply to the local market as the nation’s three main refineries in Port Harcourt, Kaduna and Warri remained moribund for nearly 40 years. There are ongoing efforts at phased rehabilitation of the refining pants which form the traditional sources of LPG for the domestic and regional markets.

The NLNG has consistently increased the volume of LPG supply from its plants as the domestic market deepened and spurred increasing demand. The company is currently the highest single supplier of LPG into the domestic market, with an estimated 400,000 metric tonnes supplied in 2021.

Mr Odeh said NLNG would now prioritize the domestic market for 100% of its Butane production for as cooking gas.

According to him, the decision comes three months after the company supplied its first propane cargo into the domestic market and has developed a scheme to sustainably supply propane for cooking gas blending.

He said propane from the company would also be used in agro-allied, autogas, power generation and petrochemical industries to further deepen gas utilization in Nigeria.

These initiatives are designed to increase LPG availability in Nigeria, diversifying its uses and support the Federal Government’s Decade of Gas initiative. 

Managing Director and Chief Executive Officer of NLNG, Dr. Philip Mshelbila, said the announcement marked the Company’s strong commitment to the continued growth of the domestic LPG market and its passion to increase utilisation of one of the most versatile energy sources in the world.

He said the Company was inclined towards helping to build a strong economy based on the gas resources that Nigeria is abundantly blessed with, and that natural gas could help drive the economy by providing cooking gas  for homes, supporting industrialisation, powering mobile cell sites and complex transportation systems, impacting food supply through its usage for fertilizer production and increasing power supply to both homes and industries while reducing the country’s carbon footprint.

According to Mshelbila, “Gas, as the cleanest of the fossil fuels, has become an essential energy source to be reckoned with during this energy transition period. Other countries are revolutionising their energy industry to cut down on carbon emissions drastically. Nigeria should not be left out in this drive, considering its abundant gas resources. Gas is essential for life and living at the moment, because it can support everything we will need to develop our economy and create better living standards for Nigerians. We need to change the narrative, and NLNG is being  pragmatic about it.

“We are ardently following up on the commitment we made in March 2021 at the NLNG-sponsored pre-summit conference of the Nigeria International Petroleum Summit (NIPS) 2021 organised by the Federal Ministry of Petroleum Resources to support the Decade of Gas declaration by the Federal Government. We are driven by our vision to remain a globally competitive LNG company helping to build a better Nigeria and are making a reality of our collective dreams that one day we can switch all cooking fuels to gas, and power our vehicles with gas as encapsulated in the government’s National Gas Expansion Program and the Autogas Policy,” he said.

“Committing 100% of our LPG supply is a major milestone in our journey of domestic gas supply. We supplied our first Butane (LPG) cargo into the domestic market in 2007, which helped to develop over the years the LPG industry in Nigeria from less than 50,000 tonnes to over 1 Million tonnes market size annually by the end of 2020. In 2021, we increased our LPG supply commitment from 350,000 metric tonnes (or 28 million 12.5kg cylinders) to actual delivery of  400,000 metric tonnes (or 32 million 12.5kg cylinders) thereby directing most of our production into the domestic market. But this was not enough for NLNG, hence this commitment to do all that we possibly can and supply 100% of our LPG production to the domestic market,” Dr. Mshelbila added.

Meanwhile the company said fake advertisements calling for recruitments in its Train-7 project are false, fraudulent and misleading.

“Neither NLNG nor its contractors have commenced recruiting for the Train 7 Project, for which construction activities are yet to commence. Members of the public are accordingly urged to exercise due diligence and caution at all times in evaluating and verifying any claims made by persons purporting to act on behalf of NLNG, and are expressly advised not to make any financial commitment in relation to any such claims as neither NLNG nor its contractors for the Train 7 Project – a consortium comprising Saipem, Chiyoda and Daewoo (‘SCD JV’) which is exclusively responsible for managing all aspects of the Train 7 Projects – will make such demands,” Mr Odeh stated in a spate release.

He advised individuals and companies interested in pursuing opportunities on the Train 7 Project to visit the contractor’s website for the correct details on how to do business with the consortium.

“NLNG expressly disclaims any liability for any losses incurred by any person(s) as a result of reliance on such fraudulent advertisements, communications, e-mails or publications,” he warned.