NLNG says Nigeria LPG market intricate, but no price increase

  … As scarcity pushes up prices at decanting plants 

 Ben Eguzozie

Nigeria LNG Limited (NLNG) says it has not raised its supply price of domestic liquefied petroleum gas (LPG) commonly known as cooking gas to decanting plants.

The gas liquefaction company said, if anything, media reports insinuating that a price hike by the company is responsible for the surge in the price of the domestic LPG in the domestic market and predicting that scarcity looms as a consequence, were “speculative and indicative of a fundamental misunderstanding of Nigeria’s intricate market dynamics”.

According to the NLNG, it “has been making defining contributions to the domestic LPG market, spurring the steady growth of the nation’s DLPG market volume from less than 50,000 metric tonnes of imported LPG in 2007 to over 1.3 million metric tonnes of both domestic and imported LPG today”.

NLNG currently delivers over 450,000 metric tonnes per annum of Butane, the main product in cooking gas; and has embarked on domestic propane supply to further grow the market, the said in a statement issued at its Bonny Island plant base.

The gas company said it has committed its entire Butane and Propane production to the domestic market from 2023, and despite feed gas challenges, it continues to supply LPG to the domestic market, accounting for approximately 40 percent of the total market volume.

“Since the beginning of the year, NLNG has delivered over 380,000 metric tonnes of LPG using the company’s dedicated LPG vessel,” the company said.

With only 40 percent of the domestic LPG demand met by the gas liquefaction company, 60 percent (780,000) metric tonnes of the product are imported by dealers. This leaves the country vulnerable to international market price volatilities.

Like petroleum, Nigeria has abundant gas deposits, accounting for about seven percent of the global gas deposits, but it has yet to develop proper harnessing facilities. The absence of determined gains from the gas liquefaction process has kept the country in continued energy poverty.

Philip Mshelbila, NLNG’s managing director and chief executive, said the company “has remained committed to delivering domestic LPG to locations as close to the market as possible by diversifying delivery points starting with Lagos in 2023, fostering competition among terminal owners and ultimately reducing consumer supply chain costs.

He informed that efforts are ongoing to reach terminals in Warri and Calabar as soon as the challenges limiting safe delivery of volumes to these other locations are cleared.

He attributed the current domestic LPG market, like any other, that is subject to dynamic market forces and various external factors. Such factors as changes in exchange rates, and escalating price benchmarks mirroring crude oil prices, and the Panama Canal drought-induced vessel scarcity impacting transport costs especially for imported LPG, have had significant effect on energy prices in the recent times and could undoubtedly be some of the reasons for recent price hikes witnessed in the domestic market.

In major towns like Port Harcourt, Enugu, Onitsha, Owerri down to Calabar, the retail price of LPG has seen northward move. A kilogramme of the product now goes for between N900 to N1,000, depending on the size of the terminal provider. Bigger plants sell N900 and N950, while smaller outlets sell N1,000.

However, NLNG maintains it has “an unwavering commitment to ensuring the reliable supply of its LPG production to the domestic market at prices that are reflective of the market. The Company is collaborating with relevant industry stakeholders to achieve this objective and will remain focused on achieving its mission through this avenue among others”.