Rainoil wants LPG import, gas flares banned

Advertisements

Sopuruchi Onwuka

Managing Director of Rainoil Limited, Dr Gabriel Ogbechie, had decried continued importation of cooking gas to meet greater part of Nigeria’s domestic requirement, describing it as an unacceptable paradox for a nation that has massive local capacity to meet local and export supply orders.

Dr Ogbechie who made a virtual presentation to media representatives on the state of the downstream petroleum industry also decried continued gas flaring at oil production sites as huge and avoidable waste to the nation’s economy.

Whereas he commended the government’s ongoing programme on gas utilization as auspicious, he also pointed out the need for the country to take harder look at its energy programmes for efficient harnessing and application of gas resources in meeting domestic transportation and industrial fuel needs.

He noted that while domestic fuel mix is beginning to balance across available products in the market, government has not provided solid structures and policies for robust and diversified supply of key products which are dominated by state agents in both oil and gas segments of the market.

He faulted prioritization of export revenues from liquefied petroleum gas (LPG) produced locally by the Nigerian Liquefied Natural Gas (NLNG) Limited over satisfaction of local demand which he estimated to have crossed the 1.0 million tons per annum mark.

He said only about 30 percent of the total domestic demand for LPG is met by the NLNG which has production capacity for over 5.0 million tons per annum (mpta) of LPG.

Dr Ogbechie made it clear that continued importation of LPG to meet local demand would sustain pressure on the local foreign exchange reserves, leading to round tripping of both products and foreign exchange.

Oracle Intelligence reports that the traditional supply sources for LPG in the country are the nation’s three refining companies managed by the Nigerian National Petroleum Corporation (NNPC). The refineries are currently moribund and about to undergo overdue rehabilitation.

The NLNG is an export focused venture which currently intervened in domestic LPG supply with about 350,000 tons per annum. Government, through the NNPC, holds overriding 49 percent non-operating interest in the company.

The NLNG plants are built on the coast of Bonny Island which currently has no road or rail link with the mainland Rivers State for transshipment of products from NLNG.

Thus, LPG supply from the NLNG is still fraught with logistics bottlenecks that require only players with marine equipment take products directly from the company’s facilities.

Managing Director of NLNG, Mr Tony Attah, declared at a recent industry conference that the company’s board has approved to increase LPG allocation to the domestic market to 450,000 tons per annum in view of government’s gas expansion programme and deeper penetration of the product among households.

There are other smaller gas processing plants operated by companies pushing virtual gas supplies in the country with products like compressed natural gas (CNG), LPG, and LNG.

Dr. Ogbechie pointed out that policies and programmes that target to produce reforms in the domestic fuel market must first address the pressing issues of supply efficiency and sustainability in the local market by eliminating bottlenecks that limit private sector participation and investments.

He pointed at the country’s multiple foreign exchange rates and fixed allowable margins as some of the commercial issues that discourage private investments in harnessing huge produced gas volumes that are currently falred.

He lamented that despite the global gas prices and huge potentials for revenue and economic application, Nigeria remains the seventh-largest gas flaring nation in the world with almost 8.0 billion cubic meters of gas annually.

He said the country lost N300 billion to gas flaring in seven months of 2020, pulling back the objective of reaching zero flaring by 2030.

According to him, Nigeria burns about 63% of the associated gas produced during the production of crude oil. He said the volume could impact the country’s gross domestic product by up to $1.0 billion per year, in addition to the potential for over one million jobs; 600,000 metric tons of LPG per year; and 2.5 gigawatts of electricity generation.

He said over $27 million would be generated by switching 50% of kerosene and firewood users to LPG.

Dr Ogbechie blamed continued gas flaring in the upstream petroleum industry on cheap flare penalties imposed by industry regulators, pointing out that the producers find its cheaper and more convenient to pay the flimsy penalties than lay out huge funds in harnessing and monetizing the resources.