BREAKING NEWS, Oil & Gas
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Supply of liquefied petroleum gas to domestic market in Nigeria drops due to logistics and infrastructural problems as importation of the product increases
| By Anayo Ezugwu | Dec 21, 2015 @ 01:00 GMT |
The Nigeria Liquefied Natural Gas Limited, NLNG, supply of liquefied petroleum gas to the domestic market in the country has dropped from 90 percent to 30 percent. This is because of the infrastructure and logistics challenges it has been experiencing. Auwalu Ilu, chief executive officer, Ultimate Gas Limited, at a special session on ‘LPG Transport, Infrastructure and Logistics – Challenges and Opportunities,’ at the fifth Annual Conference of the Nigeria LP Gas Association, said inadequate vessels to load LPG and jetty facilities for berthing of LPG vessels had created a dwindling supply of the product from the Bonny Island plant of the NLNG.
NLNG, which had accounted for 90 percent of supply to the domestic market, was currently responsible for only 30 per cent, while importation and the refineries accounted for 60 percent and 10 per cent, respectively. According to him, only one vessel, GAS DE PROVIDENCE shuttles between Lagos and Bonny Island to deliver LPG from NLNG to the domestic market, stressing that inadequate jetty facilities have led to situations whereby the vessel could not berth for several weeks, thus accumulating demurrage and creating tight supply situation in the market.
NLNG had in 2007 dedicated 100,000 metric tonnes to the domestic market annually but later increased the volumes to 250,000 metric tonnes. However, the local market could not absorb the dedicated volumes due to the challenges of infrastructure and logistics to take the product from Bonny Island to Lagos.
Ilu stated that it is cheaper for the operators to import LPG than to take it from Bonny to Lagos. He added that even the LPG loading facilities at the Bonny Island were designed for exports and not the local market, and argued that there is a serious mismatch in the LPG supply chain in the country. “Getting access to the jetty in Lagos, is an issue and the management of the jetty is also an issue. It sounds strange that you have dedicated 250,000 metric tonnes but you import more than the dedicated volumes. Sometimes it is cheaper to import from America and deliver to Lagos, than to get from NLNG in Bonny. There is more import of LPG than from NLNG today.
“We have to look at the supply chain. If you look at the mismatch between the port of loading at NLNG and the port of discharge in Lagos, you will see that there is serious mismatch caused by vessel size and Cabotage, which has also brought a lot of issues. However, in import, there is no mismatch or limitation of Cabotage. So, you import according to your capacity,” he said.
Similarly, Abdulkadir Ahmed, manager in charge of marketing and development at NLNG Limited, said it was difficult for his company to find a vessel that could fit into the Bonny facilities to load the product and also fit into the terminals in Lagos, to discharge product.
According to him, GAS PROVIDENCE was selected largely because it is a flat-bottom vessel. Ahmed, however, added that before the NLNG’s intervention in the supply of LPG to the domestic market in 2007, the major challenge facing the LPG marketers was reliability of supply, and insisted that the intervention of his company has successfully addressed this challenge. “Our main concern is that there is no standardization of quality of product. We understand that some imported LPG is not of right quality. We must ensure that only products of right quality are imported,” he said.
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