Why gas importation thrives despite 200t reserves

• Marketers, Stakeholders Blame Infrastructure Deficit, Dearth Of Investment, Poor Policy
• Nigeria Has Only One Vessel For LPG To Service 200 Million People

Even though Nigeria’s gas reserves hover above 200 trillion cubic feet (tcf) with daily production of about eight billion cubic feet (bcf), the continuous importation of over 80 per cent Liquefied Petroleum Gas (LPG) is generating fresh concerns among industry players.

Not only is this development a grave danger to the nation’s environment, revenue, the realisation of Sustainable Development Goals (SDGs), job opportunities and international treaties aimed at addressing climate change, it also makes a mockery of agendas set by the Presidential Muhammadu Buhari-led administration to boost LPG penetration in the country.

Coming at a time that the Federal Government is projecting the use of clean energy for cooking, at least 82 per cent of cooking gas consumed in the country last December was imported, whereas Nigeria flared N460.5b worth of natural gas in 2019 alone.

This scenario is the reason that stakeholders, including gas marketers and energy experts, are blaming wrong policies, disregard for technical know-how, the dearth of infrastructure, poor business environment, and other challenges, which deter investment in the sector.

Amid the continuous use of firewood and poor perception of cooking gas, marketers insist that the country may continue to spend foreign exchange on gas importation, as only one vessel supplies the entire country, through the Nigeria Liquefied Natural Gas Limited.

Similarly, some players have insisted that uncertainties surrounding changes in the fiscal framework, local community crises, mismatch in currency, Domestic Supply Obligation (DSO), and gas pricing constraints would limit exploitation of gas potential in the country.

In its LPG Consumption Report for December 2019, the Petroleum Products Pricing Regulatory Agency (PPPRA) noted that imported LPG accounted for 81.68 per cent of total LPG supplied in December, which stood at 94.004 million metric tonnes in total.

On the other hand, 17.22 million metric tonnes of LPG was obtained from the NLNG, accounting for 18.32 per cent of total LPG supplied in the country in December 2019. The volume of LPG supplied in the country in December was 33.45 per cent higher than the 70.439 million metric tonnes supplied in November 2019.

While the development continues to create economic losses, putting further pressure on the nation’s hard-earned foreign exchange, the collection of wood for fuel is responsible for the loss of 350, 000 hectares of land yearly to desertification.

Indeed, the Food and Agriculture Organisation of the United Nations (FAO) had reported that between 2000 and 2005, the country lost 55.7 per cent of its primary forests, and the rate of forest change increased by 31.2 per cent.

From 1990 to 2010, nearly half of Nigeria’s forest cover was reportedly destroyed.

With the rate of wood felling for cooking purposes, Nigeria, which has the fourth-highest deforestation rate in the world may, according to the Food and Agriculture Organisation (FAO), continue to lose over 400, 000 hectares of land per year, while major natural resources are projected to disappear in the next 30 years.
 
Stakeholders have also said the implications are that there would be increasing temperatures and decreasing rainfall as emissions from deforestation in the country reportedly stands at 87 per cent.

According to the National President of the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM), Nosa Ogieva-Okunbor, the continuous importation of LPG is as a result of government’s policy and the lack of infrastructure.

“The vessel that brings gas from the NLNG is so small. We need a mother vessel that small vessels can quickly discharge from. It is infrastructural decay that is causing some of these problems.

“When they bring gas from NLNG to Lagos or Port Harcourt, it takes days to return back. Just one vessel to service the entire country is not enough. Until the right things are done, there is no way importation will not come in to cushion the deficit,” Ogieva-Okunbor said.

Disclosing that about 900, 000 metric tonnes of LPG was supplied across the country last year, he stated that the NLNG has the capacity to supply the current need, provided government issues directives to that effect, without that, scarcity of the product will ensue.

Ogieva-Okunbor said cylinder remained one of the critical challenges facing the penetration of cooking gas in the country, stressing that some of the locally produced and imported cylinders were time bombs.

The NALPGAM boss, who stated that illegal LPG plants are also adding to challenges in the sector, disclosed that the development was responsible for the gas explosion and also deterring people from using cooking gas.

The General Manager (Gas) at Seplat Petroleum Development Company Plc, Okechukwu Mba had, at the just concluded Nigerian International Petroleum Summit (NIPS) said that lack of adequate infrastructure; funding constraints for upstream, midstream and downstream sectors; sub-optimal institutional and regulatory framework, including an extensive and bureaucratic process for obtaining licenses and approvals, weak corporate governance and policy inconsistencies were blighted to the sector.

Mba said Nigeria could save significantly on CO2 emissions by replacing diesel generators with natural gas plants – potentially reducing CO2 emissions by 18.2 million metric tonnes per year, adding that this would, in turn, improve the standard of living of Nigerian citizens through reduced exposure to Greenhouse Gas and noise pollution from generators.

“Natural gas is a cleaner fossil fuel and as such can help Nigeria achieve her developmental aspirations by increasing power generation efficiency with relatively low climate damage, thus delivering a win-win scenario,” he noted.

The Chief Executive Officer of Degeconek Nigeria Limited, and former President of Nigeria Association of Petroleum Explorationists (NAPE), Abiodun Adesanya, noted that the country has been unable to harness her gas resources because people, who have technical know-how are not in charge of policy making.

“It is very important to have the gas infrastructure and create an enabling environment with a focus on LGP infrastructure. This would boost the economy of people, especially small and medium scale businesses. It will also increase the consumption of LPG, as well as reduce the use of firewood, a development, which is safe for our environment,” he stated.