The Nigeria Liquefied Natural Gas Limited has said that its domestic liquefied petroleum gas scheme has guaranteed a 40% delivery into the Nigerian market.
The company stated this during a recent visit to President Bola Ahmed Tinubu.
In a report Managing Director/Chief Executive Officer of NLNG, Dr. Philip Mshelbila, said that NLNG’s Domestic LPG (DLPG) Scheme has guaranteed LPG supply, availability, and affordability and has also stimulated the development of different parts of the DLPG value chain in Nigeria.
This means that 100% of produced LPG volumes from NLNG are dedicated to the domestic market, supplying about 40% of Nigeria’s domestic LPG demand.
Other realities
The shortfall of that supply is imported into the country and marketers who import the product have to surmount the vagaries of the international market which in turn impacts prices for the end consumers.
On the other hand, the forex challenges the country is currently navigating also play a role in LPG imports, also complicating the situation for marketers and end-consumers.
To resolve these challenges, Nigeria needs to increase its gas processing capacity.
Weeks ago, HydroCIS, an energy data company told Nairametrics that to increase gas processing capacity in the country, the country needs investments in infrastructure.
Note that Nigeria does not have enough facilities for gas processing/storage space.
Some companies are taking up the challenge to increase local capacity, like Ardova Plc, which is currently constructing its 20,000 metric tons (MT) gas storage facility in Lagos state.
According to HydroCIS, one of the major challenges facing gas processing players in Nigeria has been downtime, as well as indiscriminate taxes, and levies.
Now the removal of fuel subsidies by the present administration has increased interest in the conversion of vehicles and generators to LPG and other gas variants.
This interest will increase demand in the country, expanding the market further in 2023 and 2024. This is why the country should look to increasing local capacity.
The president has appointed a gas minister and it is expected that the focus will be on increasing gas investments so local supply will be on the rise.
What you should know
HydroCIS analysts expect 2023 to be a year of recovery in the LPG space.
He also said that by the end of 2023, Nigeria should have up to 1.3 million tons, given the 15% annual growth rate.
They also expect that by 2024, the country should be doing up to 1.5 million tons in LPG supply.