Sopuruchi Onwuka

The Nigerian domestic petroleum market appears to have completed the first phase of fuel displacement after the Nigerian Liquefied Natural Gas (NLNG) Limited intervened with dedication of its total liquefied petroleum gas (LPG) popularly called cooking gas for domestic consumption.

The intervention came in response to a spate of national outcry against the rising cost of former domestic fuel, kerosene, which was once subsidized to be the cheapest form of refined product in the country.

Poor and devious deregulation of kerosene by the past administrations of the federal government had plunged homes and business into cost crisis, forcing families back to use of charcoal and firewood; threatening to erase the gains in the country’s clean fuel agenda.

Controversies and uproar surrounding the spikes in the cost of kerosene and inability of the market operators to proffer credible explanation to customers on the status of the highly subsidized cooking fuel had pushed the country to the edge of national commotion.

While allegations and accusations flew in the wind, only the NLNG stepped in with practical solution of availing the nation a sustainable, cost efficient, healthier and environmentally friendly fuel option to contentions kerosene.

“NLNG takes pride in its role in the LPG sector, facilitating the entry of more stakeholders into the LPG value chain and encouraging investments in infrastructure development to bolster sectoral growth. This endeavour has contributed to the creation of additional employment and business opportunities in Nigeria” declares the company’s pokesman, Andy Odeh.

With domestic demand for LPG restrained to less than 300,000 metric tons per year prior to commercial deregulation of kerosene in the fuel market, the price moderation accompanying intervention of NLNG has since pushed demand to current 1.5 million tons per annum (mtpa) as more homes switch from kerosene to cooking gas.

NLNG clarifies that it annually provides close to 500,000 metric tons of LPG to meet market demands in pursuit of its commitment to deliver 100% of its LPG production to the domestic market, a decision made by the Company’s Board of Directors in 2022.

In 2023, NLNG supplied 493,000 metric tons of LPG to the domestic market, 498,000 metric tons in 2022 and 399,000 metric tons in 2021; amounting to some 30% of the total 1.5 million metric tons LPG demand in the country.

Mr Andy Odeh declares that the NLNG maintains a firm commitment to supplying LPG to the domestic market and remains focused on promoting increased gas utilization within the country by raising awareness about the use of clean gas for cooking to mitigate health risks associated with firewood usage.

The company’s intervention in the local LPG market forms a mere particle of its entire vale creation in the Nigerian economy.

In the past 35years of its operations in the country, the NLNG has remained the symbol of Nigeria’s natural gas prowess. It has flown the country’s flag with dignity and power in the international energy market, pumped in revenues to support national budgets and economic plans, created robust opportunities for direct and indirect employment, enhanced local industry capacity and capability, and lead erasure of petroleum industry footprints on the environment.

The NLNG is also a notable business model which successfully launched off the highly promoted incorporated joint venture that twisted off the NNPC/Shell/TotalEnergies/Eni oil and gas exploration and production joint venture in the country.

The NLNG is the only Nigerian player in the global LNG market and by 2028, according to the data available at IEEFA and IGU, Nigeria’s total LNG export capacity is estimated hit 30 mtpa with the company’s ongoing Train-7 project. This will make the country take visible space in the 666.5 mtpa of total global capacity.

With the NLNG’s position in the global supply space, the company currently leads delivery of all the economic, environmental, commercial and social dividends of various government policies on gas valorization.

The company’s existing capacity of 22 mtpa has already translated to huge economic dividends for the nation of 200 million poor people that currently grapple with poor social and economic infrastructure, worsening insecurity, high unemployment rate, runaway inflation, frequent disease outbreaks and low life expectancy rate.

The gas processing and export company has continued to lay model for policy compliance, enterprise management efficiency, transparent financial operations, commercial viability and high returns on investment.This is in addition to moving the nation’s economy from being oil-based to becoming a global gas supply force.

In its first 20 years of operation, the NLNG reported over $100 billion in revenue. It declared payment of over $16 billion dividends to the federal government through NNPC. It patronized local gas producers with feedgas purchases worth $13 billion; and paid $6.5 billion in taxes.

The ongoing Train-7 project which promises to grow the company’s production capacity by 30 percent also holds immense potentials to further spur the nation’s domestic productivity through a dedicated local content quota already secured by the regulator in a binding Nigerian Content Plan.

The NNPC which holds the government’s 49 percent stake in NLNG has already declared that the Train-7 project would enhance the development of additional gas molecules and wheeling infrastructure in the country. The national oil company stated in Abuja that the expected gas gathering system would connect trunk lines from oil production sites to domestic market, opening up a flexible flow system that allows swinging of upstream gas to the direction of demand.

The NLNG also remains the first major petroleum company in the country to sign service level agreement with the NCDMB to shorten contracting cycle, cut cost of projects, and improve compliance with the Nigerian Content Act.

By the agreement and the signing of the Nigerian Content Plan for the Train-7 project, the NCDMB had laid an advance template for domiciliation of job in the areas of the project where capacity exists in-country.

The NLNG ranks first among all companies in the country on transparency of operations and industry best practices. It has the biggest annual budget for corporate social responsibility. And it has taken some of the biggest and audacious community development projects in the country.

The NLNG held the promise of being Africa’s largest and fastest expanding enterprise that flies Nigeria’s flag across international sea routes to connect the country’s natural gas resources from local oilfield flare booms through processing plants to farthest markets in the world. It also takes responsibility for displacing dirty fuels and associated health issues from Nigerian homes by supplying over 40 percent of total clean cooking fuel in the domestic market.

The company which is run entirely by Nigerian management team remains the symbol of national industry competency. And it stands tall with the reputation.

Managing Director and Chief Executive Officer of Nigeria LNG Limited (NLNG), Dr. Philip Mshelbila, told the Minister of State for Petroleum Resources (Gas), Rt. Hon. Ekperikpe Ekpo, that the company still holds medium to long term relevance in the global energy demand projections as energy transition from fossil sources begin to take toll on new development investment financing.

 And despite the prevailing global indignation towards new fossil fuel development, the NLNG is able to secure international financing for its ongoing expansion programme in a bid to earn the country greater space in the low emission energy market.

It is also evident that the NLNG is advancing to become the nation’s leading resource income earner and growth enabler in the domestic economy. 

In its years of operations, NLNG has catalyzed investment surge in the sector, arrested increasing gas flare emissions and associated resource waste; spurred investments in gas harnessing infrastructure; led new world class gas-based enterprises; and activated associated industrial activities that create jobs, earn huge revenue for stakeholders and financed social service interventions that alleviate the suffering of Nigerians.

According to its 2019 business report, the company currently takes 3.5 Bcf/d off flare and prepares to monetize additional 2.5 Bcf/d on the back of Train 7. It has in its 20 years of operation harnessed and processed over 6.37 trillion cubic feet of associated gas into LNG and NGLs, and helped Nigeria cut gas flares from over 60% in 1999 to less than 20%. The NLNG holds potential to valorize greater volumes of gas as it progresses with expansion with ambition for Trains 8, 9, and 10.

The company has contributed significantly to meeting internal demand for cleaner energy by domiciling its full supply for cooking gas, saving the country considerable import bills for LPG and protecting the Nigerian consumers from swings in retail prices of the product.

On revenue delivery to stakeholders, NLNG states that apart from cutting gas flares in the country and reducing operations impact on air quality, it has made market return of over $100 billion or N70 trillion, with 40 percent or N28 trillion ploughed back into social and economic development of the country.

The company declared in its 20 year anniversary performance report that it paid some $8.0 billion or N5.6 trillion in direct taxes to the government, and another $17 billion or N11.9 trillion in dividend to government for its overriding 49 percent equity stake in the business.

On the transaction side NLNG said in its operations report for two decades that it purchased $13 billion or N9.1 trillion worth of gas from the government through the Nigerian National Petroleum Company (NNPC) Limited, and another $2.5 billion or N1.75 trillion to secure feedstock and ensure full operations uptime at its existing six liquefaction trains.

Other payments declared by the company include employee income tax, state and local government taxes, as well as regulators’ levies and fees totaling over N60 billion.

Beyond dividends, taxes and gas purchase values, the company had in 2019 declared voluntary commitment of about N222 billion in social responsibility projects in Nigeria, especially in rural communities.

Some of the details of the company’s corporate social responsibility in the country, according to it 20 year operations factsheet include over N25 billion on community projects over the years; and over N2.0 billion in building world-class engineering laboratories in six Nigerian Universities under its University Support Programme.

Besides financial payments to government and funding contributions for development of social and economic infrastructure and amenities, the company says it pulled in over $16 billion or N11.2 trillion worth of foreign direct investments into the country, created 12,000 direct jobs and 18,000 indirect jobs in each phase of its construction projects, supplied over 1.5 million tons of liquefied petroleum gas (LPG) also called cooking gas to the domestic market to further curb pollution with cleaner, cheaper and available fuel for homes and businesses.

The company added that it has also gone beyond business scope to participate in the pooling of funds for the development of host Niger Delta communities through the Niger Delta Development Commission (NDDC). The company had in the first 20 years of operations paid over N25 billion in contribution to the developments of the Niger Delta, committed to contribution of another N60 billion to the construction of the first ever highway of roads and bridges to link the Bonny Island to the rest of the country.

Provision of 50 percent of the project cost, The Oracle Today reports, activated a 40 year old plan by government to deliver 43 kilometre Trunk A highway across sinking marshy wetlands to connect the ancient kingdoms of the island of Bonny to the rest of Nigeria for the first time in history. The Bonny Island which hosts critical oil and gas installations that provide considerable revenues that support government’s fiscal plans is currently accessible by sea, or by air courtesy of the Finima airstrip provided by NLNG.

According to the project details for the Bonny-Bodo road, north section of the road would be 17, 365 meters; south section would be 15, 806 meters while the rest would be made up of 1000 meter bridge across the Opobo River, 550 meter bridge across the Alfa Creek and other smaller bridges and culverts.

And beyond the 50 percent funding contribution for the N120 billion Bonny-Bodo Road project, the company has also signed a separate memorandum of understanding (MOU) with Bonny Kingdom to pay princely N75 billion in development grant on annual installment of N3.0 billion for 25 years.

In addition to interventions in infrastructure development across host Niger Delta communities, NLNG says it is also promoting scientific research in developing solutions to key developmental challenges in the country through sponsorship of the $100,000 (N70 million) Nigeria Prize for Science.

It also sponsors another $100,000 Nigeria Prize for Literature to promote excellence in creative imagination. The prizes are separate from scholarships, health initiatives and infrastructure development in many Nigerian communities, the company states in its CSR file.

In delivering the policy aspiration on Nigerian Content Development (NCD), NLNG brandishes its corporate profile as the first multinational joint venture that is operated with 100 percent Nigerian management team.

Group Managing Director of NNPC, Mallam Mele Kyari, who spoke on the Train-7 project, pointed out that NLNG has met and exceeded government’s short to medium term objectives on reduction of routine gas flares. He commended the company on enhanced Nigerian Content in its activities; gas revenue generation; ancillary business catalysis, cheaper, cleaner and reliable gas fuel supply; and job creation.

The Nigerian Content Development and Monitoring Board (NCDMB) stated in a document that the NLNG became the first multinational company in Nigeria to sign Service level Agreement (SLA) and Nigerian Content Plan (NCP) on projects.

It is therefore unassailably logical that a company with such huge economic value proposition for the economy, high offer for commercial returns to shareholder, massive corporate social responsibility (CSR) scorecard, and methane emission mitigation value for the environment deserves all policy and fiscal incentives to drive growth, capacity and expansion to fit into the new race for global cleaner energy market share.