The Nigerian National Petroleum Company (NNPC) Limited and its partners which include Shell Petroleum Development Company (SPDC), Nigerian Agip Oil Company (NAOC), Total Energies and Gas Aggregation Company of Nigeria (GACN), have signed a Gas Sale and Aggregation Agreement (GSAA), aimed at increasing local production of fertilizer in the country.
The signed deal which could save Nigeria about $1.8 billion in foreign exchange, will see these oil and gas firms supply 70 million standard cubic feet per day of natural gas to Dangote Fertiliser Limited (DFL) to ramp up operations at the plant.
According to NAN, the Gas Aggregation Agreement was signed in Abuja on the sidelines of the ongoing fifth Nigeria International Energy Summit (NIES 2022) with the theme “Revitalising the Industry: Future Fuels and Energy Transition.”
What the GMD of NNPC is saying about the deal
The Group Managing Director of NNPC, Malam Mele Kyari, said during the signing ceremony that the deal was part of its drive to ensure greater utilisation of gas in the country, by way of conversion or monetisation in the form of Liquefied Natural Gas.
Kyari said NNPC had progressed its engagement with Dangote Group for the SPDC joint venture, which comprised of NNPC, Shell, ENI and TotalEnergies to deliver 70 million cubic of gas to phase two Dangote plant, adding that this would no doubt increase gas in the domestic market.
The NNPC boss said, “But more importantly, it is a platform that will increase local production of fertiliser in our country.
“As you may be aware, it is government’s drive to ensure that we become self-sufficient in the production of fertiliser in the country, and specifically for this year’s zero import of fertilisation in the country.
“Currently, Dangote group provides about 65 per cent of all domestic production of fertiliser. And we are happy to sign the Gas Supply Agreement with them.’’
What the Chairman of Dangote Group is saying
Speaking at the event, the Chairman of Dangote Group, Alhaji Aliko Dangote, expressed his appreciation to the Group Managing Director of NNPC for his effort in actualizing the signing of the agreement.
Dangote said that the additional gas would bring in more foreign exchange into the country in view of the energy crisis.
He said apart from Egypt, no other African country had the capacity, adding that it would meet with domestic market and export at least $1.8 billion in terms of foreign exchange coming into the country.
Dangote said, “I want to thank the Group Managing Director (Mallam Mele Kyari) for his leadership. Without him, this wouldn’t have happened. I also want to commend Shell, and most of all Bala Wunti (Group General Manager, National Petroleum Investment Management Services (NAPIMS) for pushing and making sure this becomes a reality.
“This additional gas will help bring in more foreign exchange into the country, especially with the current energy crisis. With our fertiliser plant, Notore, and Indorama, we are second in Africa. Apart from Egypt, no other African country has our capacity.
“We will meet domestic market and also export and we are talking about $1.8 billion (savings) in terms of foreign exchange coming into the country.’’
What the MD of SPDC and Country Chairman, Shell Company is saying
In his remark, Chairman, Shell Company, Mr Osagie Okunbor, thanked the joint team that have worked extremely hard to sign the gas sale aggregation agreement.
He said, “It is huge important to this country because already Dangote produces the bulk of fertiliser and we know how important the subject of agriculture is and for not just energy security, but also food security.
“This is why all of us on the SPDC JV led by the NNPC but also with my colleagues in TotalEnergies really pleased to be able to execute this agreement.’’
What you should know
- Natural gas is a feedstock of the Dangote Fertiliser plant, with this gas supply deal expected to guarantee the availability of the major raw material needed to run the plant.
- Recall in a newly released Domestic Gas Demand Requirement for 2022 by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the demand was pegged at 4.4 billion standard cubic feet for Nigeria.
- Nigeria is regarded as one of Africa’s largest in hydrocarbon exploration and production, with over 206 trillion cubic feet of natural gas.
- Although the country boasts of huge gas reserves, its exploitation of natural resource remains very low.