The decision of the Nigerian National Petroleum Corporation (NNPC) and its partners to take the final investment decision to build the first $3 billion methanol-processing plant is expected to open up fresh investment opportunities. This is as the country seeks to compete in the global methanol market with a new investment.
Having seen its revenue from oil decline amid a drop in production, on the back of weaker global oil prices, the Nigerian government is trying to raise its game in terms of competitiveness in its gas resources as well as oil.
Home to the largest natural gas reserves in Africa and the ninth-largest in the world, Nigeria’s gas sector could become a beehive of investment opportunities, including in methanol production.
Global market
The global market share of methanol stood at $20.4 billion in 2020 and it is projected to hit $26.6 billion by 2025, GlobalData, a UK-based data and analytics company, says in its 2021 outlook report.
Russia, Iran and the United States are expected to drive capacity additions during the forecast period, contributing around 59 percent of the total global methanol capacity.
By 2025, GlobalData expects Russia to account for the highest capacity additions with 40.35mt, Iran as the second with a capacity of 29.39mtp, and the US as third with a capacity of 23.74mtpa.
The above projection is one year ahead of the projected timeline of when Nigeria would be expecting the completion of the first phase of the Brass Fertilizer and Petrochemical Company Limited (BFPCL) project structured to consist of two trains of gas processing plants (GPPs) and two trains of methanol plants scheduled for 2024.
Nigeria’s BFPCL project will be expecting two trains producing 5,000 tons per day (MTPD) of methanol. It will also include a 500-million standard cubic feet per day (MMscf/d) gas processing plant to extract condensate from the natural gas, before feeding the balance lean gas to the methanol plant.
Opportunity for Nigeria
Nigeria has the ninth-largest proven natural gas reserves in the world with approximately 200 trillion cubic feet (tcf). Despite having the largest reserves in Africa, only about 25 percent of those reserves are currently being developed while also importing 100 percent of the methanol it uses.
Most stakeholders have advocated for higher market penetration by putting the right regulations, fixing infrastructure, and encouraging the private sector in order to unlock the nation’s huge gas potential.
“The intrinsic vision is to expand the currently existing chemicals industry value chain, and to firmly establish a thriving methanol fuel industry geared towards improving the quality of automotive fossil-based fuels for transportation and power generation in Nigeria,” Templars, one of the largest full-service law firms in Nigeria, notes in a report “The National Policy on Methanol Fuel Production Technology.”
The law firm explains that there is a need for the availability of low-interest preferential loan arrangements to aid the development of large-scale methanol value chain schemes and integrated operations.
Templars notes that the existing regulatory framework governing refined products in Nigeria is not robust enough to effectively implement and nurture the methanol fuel programme.
“The government needs to create a framework which can attract foreign investment into the methanol fuel industry and anticipates the involvement of the domestic financial and commercial sectors of the economy in stimulating the growth of the methanol fuel industry in Nigeria,” Templars states.
Timipre Sylva, minister of state for petroleum resources, said the BFPCL methanol plant was in line with Nigerian President Muhammadu Buhari’s plan to aggregate and monetise all stranded gas in the Brass area, which amounts to over 10 trillion cubic feet of gas, into the processing facilities to be built in the hub.”
In December, the government also launched a gas-processing plant to be fed by previously flared gas from oil fields owned by state-run Nigerian Petroleum Development Co., aimed at producing LPG and CNG for distribution across the country.
NNPC estimates domestic demand for natural gas rising from current levels of 1.5Bcf/d to 7.4Bcf/d by 2027.
What is methanol?
Methanol also referred to as methyl alcohol and derived from natural gas and other sources, and is used for industrial purposes. It serves as an energy carrier for factories and electricity generation and alternative fuel in the face of the demand for cleaner energy.
Methanol finds applications in various end-use industries such as automotive, construction, electronics, solvents, pharmaceuticals, appliances, packaging, and insulation due to its unique properties.
