As federal government appear more determined to strike out petrol subsidy regime, indigenous oil and gas firms are taking fresh investment decisions to expand internal gas market.
LEADERSHIP check reveals that many companies in the downstream sector are targeting investment that will deliver more Liquified Petroleum Gas(LPG) that serves dual purpose as automotive and cooking fuel and Compressed Natural Gas(CNG) that will serve as alternative to petrol.
Already, LEADERSHIP gathered that the Nigerian Independent Petroleum Company(NIPCO) Plc has invested over $100 million on gas infrastructure across the country.
Spokesman of the firm, Taofeek Lawal, said the firm is deepening its investment in the gas sector in line with its aspiration to play a pivotal role therein.
Lawal, said though the key challenge here remains dearth of infrastructure, the company sees huge revenue potential in the CNG investment as petrol subsidy withdrawal may push the product price up to about N400 per liter.
On the other hand, he said, CNG presently costs about N120 a liter for vehicles while industrial users pay just about N130 a liter.
“Aside constraints with regard to conversion kit of about N200,000 to N250,000 for cars, the cost of using CNG is very economical and should be encouraged,” he said.
He, said the company also considers the huge investment in order to support the Federal Government’s ambitious ‘Decade of Gas’ initiative.
The company has also increased market leadership in the country, adding that Compressed Natural Gas and Auto Compressed Natural Gas are bound to be a preferred fuel of choice due to safety, environment, economic and abundant availability reasons in Nigeria, as the country gears up to do away with fuel subsidy.
According to him, the number of vehicles running on Compressed Natural Gas (CNG) in Nigeria has grown to 7,000,adding that, the company will not rest in multiplying this number in no distant future.
The company started the CNG operations in 2009 in Benin City by providing natural gas to Industries by way of Piped Natural Gas and Compressed Natural Gas to automobiles by way of AutoGas (AutoCNG). NIPCO Gas is the pioneer company in CNG distribution in Nigeria.
Presently, NIPCO Gas operates 12 CNG stations in Edo, Kogi, Delta, Ogun states, and Abuja. Four CNG stations are under various stages of construction and approval in Oyo, Lagos, Akwa Ibom state, and Abuja FCT, Lawal said.
He said these CNG stations cater for Auto Gas requirement of vehicles, providing a cleaner, safer, economical, proven and indigenous fuel.
He added that; “NIPCO Gas operates approximately. 40 kilometres of pipeline network in Benin city and approximately 50 km pipeline network on Lagos lbadan expressway and energies industries for their power requirements by way of providing piped natural gas (PNG).
Another firm, Hyde Energy Limited which is an indigenous oil and gas company, is equally making fresh investment in the midstream sub-sector of the industrial, specifically, targeting expansion in the Liquified Natural Gas, chain.
The company revealed it has made significant achievements in the LPG market and is keying into federal government’s decade of gas initiative.
The chief executive of Hyde Energy, Olademeji Edwards, while providing information on the intended investment, said the firm has made reasonable contributions to the country by assisting local businesses to convert from charcoal to LPG.
Hyde Energy is also expanding its LPG operations to capitalise on massive potentials in the Nigerian market. It has built trusted reputation in the global, regional and national wholesale LPG markets.
Hyde Energy operates across the value chain of the energy industry. The company deals with the importation of petroleum products including Premium Motor Spirit, PMS, Gasoil, Dual Purpose Kerosene, DPK, Jet Fuel, Liquified Petroleum Gas, LPG, automotive lubricants and Naphtha.
Oladimeji said:“In our Nigerian home market, we have established Hyde retail stations, launched a comprehensive range of Hyde Energy branded lubricants and developed an end-to-end Liquefied Petroleum Gas (LPG) distribution system. Through excellence – our guiding light – the Hyde Energy management team, is building a truly global oil and commodities business. In doing so, we are helping balance global supply and demand with the needs of the developed and emerging economies we serve.
“Bear in mind that that is one of the challenges of LPG in the market today because 50 to 55 per cent of LPG consumed in the country today is still being imported. So, there is a foreign exchange component in that mix. Those are the things the incoming government has to manage especially as far as the economy is concerned. If they are able to reduce the cost of the dollar, you will see that it will reflect on the pump price.”
He said, the company is poised to penetrate the Lagos and south West markets with its quality products and brands, having made inroads in some other zones of the country.
Speaking on subsidy removal, he said: “Subsidy removal has been a 20-year-old conversation and there are no ifs but or maybe on the removal of subsidy. Unfortunately, we missed several opportunities in which subsidies would have been removed and where the cushion on the increased price would have been easy on Nigerians. That has come and come especially during the pandemic when the crude oil prices were low and we would have enjoyed a period of low petrol prices. It is inevitable.
“The challenges the country has are the absolute price of oil and the exchange rate. As long as you have high oil prices and a weak naira, the price of petrol pump price will be relatively high. But as investments are happening in the country and there is an increase in the Naira, we expect the value of the naira to go up and ultimately, that should ultimately affect the price.”
Insider source in the energy sector disclosed to LEADERSHIP that, aside the two earlier mentioned Coys, a couple of other indigenous oil and gas firms are mapping out plans to increase investment in gas as they see LPG and CPG as the fuel of the future.
