NLNG Clarifies Role in Domestic LPG Market

0

By Ikenna Omeje

The Nigeria Liquefied Natural Gas (NLNG) has said that the report by the Punch Newspaper that it produces 22 Million Metric Tonnes Per Annum (MPTA) of Liquefied Petroleum Gas (LPG), popularly known as cooking gas, is inaccurate.

The Punch had on Sunday in an article titled “How high cost of cooking gas leaves Nigerians with deadly alternatives” reported that despite NLNG having the capacity to produce 22 MTPA of LPG, it “allocates only 350,000 metric tonnes to the Nigerian domestic market that requires about 1.2 million annually, while the rest is exported.”

A statement signed by the General Manager, External Relations and Sustainable Development, NLNG, Eyono Fatayi-Williams, noted that contrary to the report, the company produces 22 MTPA of Liquefied Natural Gas (LNG) and 5 MTPA of Natural Gas Liquids (NGLs).

The statement also stated that it is not correct that NLNG contributes to the supply shortfall of cooking gas, currently being witnessed in the country and consequent price hike, adding that the price of cooking gas in the domestic market is influenced by several market factors, including the forces of demand and supply.

According to the statement, NLNG recently increased the volume of  its annual commitment to the domestic market from 350,000 to 450,000 metric tons, which is about 100 percent of its Butane production, stressing that the company’s current maximum Butane production meets about 40 percent of domestic demand.

“It is grossly inaccurate to state that NLNG produces 22 Million Tonnes Per Annum (MTPA) of Liquified Petroluem Gas, otherwise known as cooking gas. NLNG is primarily an export company that produces 22 MTPA of Liquified Natural Gas (LNG) and 5 MTPA of Natural Gas Liquids (NGLs),” NLNG said in a statement.

“It is also erroneous, to say the least, that NLNG contributes to the supply shortfall of cooking gas in Nigeria and consequent price hike. The price of LPG in the domestic market is dependent on several market factors, including the forces of demand and supply.

“On the supply side, NLNG plays a pivotal role in the Nigerian domestic LPG market in line with the commitment it made to help deepen the market. Recently, the Company increased the volume of  its annual commitment to the market from 350,000 to 450,000 metric tons, which is about 100 percent of its Butane production. Butane gas is less volatile and is, therefore, suitable for cooking. In 2020 alone, NLNG supplied over 80 percent of its LPG sales (Butane/cooking gas) to the Nigerian market.

“By committing 100 percent of its Butane production, NLNG has prioritised the domestic market, thus realising its domestic supply target safely.

“NLNG’s current maximum Butane production meets about 40 percent of domestic demand. The balance is supplied by other domestic producers or via imports. Therefore, NLNG’s production alone is not sufficient.

“In order to achieve its aspiration for the domestic supply, a dedicated 13,000 metric ton vessel, LPG Alfred Temile, delivers the product to the market through Lagos and Port Harcourt terminals. The vessel’s delivery to these terminals are occasionally hampered by challenges at the terminal, including storage capacity, terminal access, draft restrictions and prioritisation of other products over LPG.

“NLNG’s domestic LPG pricing is most competitive compared to all other alternatives (imported and domestic supply).  However, it is important to note that several factors such as VAT, Forex, etc., impact the pricing of the product which is indexed to the international pricing model.

“NLNG’s drive towards deepening the domestic LPG market is pivotal in line with NLNG’s vision of helping to build a better Nigeria. The Company is optimistic that the eventual completion of its Train 7 Project will further  will provide deepening the domestic LPG market.”

Leave A Reply

Your email address will not be published.