Upstream Supply Challenges Affecting Supply of LPG to the Domestic Market – NLNG
The Nigeria LNG Limited (NLNG) has said that upstream supply challenges is affecting the supply of Liquefied Petroleum Gas (LPG) to the domestic market, but reiterated its commitment to 100 percent of all its LPG to the domestic market despite feedgas and market challenges.
The Managing Director/Chief Executive Officer of NLNG,, stated this at the Nigerian Association of LPG Marketers (NALPGAM) 35th Annual General Meeting in Port Harcourt, Rivers State.
These challenges, according to Mshelbila, also include the inability of the market to completely absorb NLNG’s propane production, leading to its scanty export of propane to avoid tank-top situations at its plant.
“When we made that commitment last year, the intention was that every molecule of butane and propane that we produce in our facility will come into the domestic market and since then we have made every effort to keep to that since January 2022. We have been successful in achieving supply of 100% of our butane production.
We have not been able to reach 100% with propane, not because we don’t want to but because the market capacity to absorb the propane is just not there. We intend that all the butane and all the propane that we produce goes into the domestic market whether propane is being used to blend with butane as cooking gas, used as autogas, or used in industry to generate power,” he said.
“Our production capacity as NLNG can supply about 400,000 tons per annum which is somewhere roughly about 40% of the current national demand. This means that the balance has to be imported. Last year, we supplied about 400,000 tons per annum into the Nigerian market.
But we did that under extremely difficult circumstances where our gas supply into our plant was heavily compromised by numerous upstream factors, the single biggest one of which is crude oil theft. And as a result of the disruption that this created, our capacity utilisation fell. Unfortunately, that remains the case today.
If we have more gas input to our plant, we can produce more LPG. So the issue of supply for us starts with addressing the upstream supply challenges, the biggest of which is crude oil theft,” he added.
The Board of NLNG in January, took a decision to commit all its LPG products to the domestic market to change the narrative of LPG being exported amidst difficulties faced by Nigerians in accessing energy.
Mshelbila stated that despite NLNG’s commitment to 100% LPG supply into the market, some local producers still export LPG out of the country. He called on all stakeholders to collaborate in reversing the trend.
He described the Decade of Gas initiative of the Federal Government as one of the most comprehensive plans in the industry, and called on stakeholders in the industry to work collaboratively to ensure implementation and unlock LPG potential in the country.
“I think that we need some favourable government policies concerning LPG pricing. We need a utilisation policy that encourages the deepening of this market. The government will need to adopt a phased removal of kerosene subsidies. We all know the challenges that subsidies provide as a whole,” he said.
NLNG is owned by four Shareholders, namely, the Nigerian National Petroleum Company Limited (49%), Shell Gas B.V. (25.6%), TotalEnergies Gaz & Electricite Holdings (15%), and Eni International N.A. N. V. S.àr.l (10.4%).
