The Nigerian Liquefied Natural Gas Limited (NLNG) said it has cumulatively supplied over 2.4 million tons of liquified petroleum gas (LPG), popularly known as cooking gas, into the domestic market, in the last 15 years.
The company said the continued supply of LPG under the NLNG Domestic LPG (DLPG) Scheme, spurring a steady rise in annual market domestic market consumption in a market that was below 50,000 tons per annum in 2007 to over one million tons per annum in 2021 and still growing.
NLNG said it currently supplies about 80 per cent of the local domestic cooking gas currently and looking forward to committing 100 per cent of its LPG supply for domestic use, which will be a major milestone in the journey of domestic gas supply.
The NLNG was established on May 17, 1989 as a Limited Liability Company, to harness Nigeria’s vast natural gas resources and produce Liquefied Natural Gas (LNG) and Natural Gas Liquids (NGLs) for export.
Liquefied Petroleum Gas (LPG) popularly known as cooking gas is a very clean versatile and environmentally friendly fuel, an essential commodity for life and living, convenient, portable energy source that is easy to transport and store. It’s produced from petroleum refining of crude oil and extraction from natural gas with varying uses ranging from heating purposes, production of aerosol propellant, input to petrochemical industry and as a refrigerant.
The policies of the federal government initiated in 2005 leading to the 2007 intervention, is what has maintained the supply sustainability that we have in the industry today. These government interventions opened up and broadened the LPG domestic market that witnessed transformation from 2004 till date.
Producers (notably NLNG) dedicated certain quantity of LPG for domestic market. However, 15 years after the NLNG’s intervention in the supply of LPG to the domestic market under the NLNG Domestic LPG (DLPG) Scheme, the programme has generated over 250,000 jobs in the sector and created the much-needed foundation for what has grown over 1000 per cent. Not only has it helped reduce the use of dirty fuel sources for cooking, it has also stimulated growth in the industry by guarantying LPG supply, availability, affordability and enabling the development of a value network for a sustainable ecosystem towards a better Nigeria. Between 2007 and 2021, NLNG has cumulatively supplied over 2.4 million tons of LPG into the domestic market, spurring a steady rise in annual market domestic market consumption in a market that was below 50,000 tons per annum in 2007 to over 1 million tons per annum in 2021 and still growing.
Giving an overview of its achievements in the last 15 years, the company said that in 2003, Nigeria was producing large quantities of LPG but this quantity was exported while domestic consumption came mostly from import. Export production of LPG was substantial but nothing was reserved for domestic market due to inability to accommodate small vessels at loading terminals at NLNG and other export points.
The federal government set up a Presidential Steering Committee on LPG (under the chairmanship of the Special Assistant to the President on Petroleum Matters) Alhaji Ja’afaru Parki, which carried out studies in conjunction with the World Bank.
In 2004, the federal government through the Presidential Steering Committee took conscious and deliberate positive actions and policy framework to change the existing conditions thus it:
Directed LPG producers to accommodate lighter vessels to supply the domestic market.
2026, the Domestic LPG industry study commissioned by NLNG in 2016 projects growth of up to 3 million tons per annum in 2026, subject to the implementation of various intervention programmes across the value chain, NLNG intensified its advocacy drive with the government aimed at facilitating the implementation of specific industry and policy initiatives necessary for the attainment of this projected market growth and development.
In 2005, NLNG commissioned a study to investigate opportunities for supply of LPG to domestic market with the objective to make LPG available reliably, at an affordable price with the vision to establish partners for all constituent activities to downstream supply point. The scope and main objectives were to update on the state of infrastructure in the LPG sector, provide options for NLNG entry into the Domestic LPG market.
In 2006, the government under Chief Olusegun Obasanjo drafted the Nigerian Gas Master Plan as a major interventionist concept to move the gas sector from its essentially dormant status in 2006 to a market-based system with willing sellers and willing buyers, realising the full potential of the sector for the benefit of all Nigerians.
However, it was obvious that the major players will be more interested in the global market and this led to the Domestic Supply Obligation (DSO) Policy. Achieving a rapid growth in supply to drive the market was unlikely to happen on its own with the current structure of the sector which was dominated by oil-centric International Oil Company’s (IOCs) with little appetite for domestic gas market development. The DSO Policy was necessitated to jump start supply to the domestic market.
Regardless of these milestones, there is a high demand of cooking gas in the country, outstripping supply which has created sharp increases in the price of LPG.
To mitigate this price surge, the NLNG said the LPG supply chain needs to be improved with more producers to increase the quantity of LPG to the domestic market; encouraging private entrepreneurs to embark on natural gas processing Implementation of flare out program (NGFCP); ensuring that petroleum refineries are revamped and functioning and reducing/waiving import duties and levies on LPG assets such as equipment, chemicals, among others.
The noted that in addition to these, the regulatory aspect of LPG needs to be simplified by the Nigerian Midstream and Downstream Petroleum Regulatory Agency (NMDPRA) particularly on processing of licenses, public enlightenment, and promoting equity investment in the LPG value chain.
The company also called on the Central Bank of Nigeria needs to ensure disbursement of loan facilities from special gas fund (National Gas Expansion Programme Framework) to competent investors in the LPG value chain.
Also, LPG producers need to increase quantity of LPG to domestic market. Accordingly, government should encourage private entrepreneurs to embark on natural gas processing and Implementation of gas flare out program (NGFCP) to recover LPG.
Other recommendations for rapid growth of in-country utilisation of LPG include that government should facilitate and encourage building of new storage facilities; increase speed of processing of licenses on LPG activities and give incentives to investors in the LPG value chain.
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