• Friday, July 19, 2024
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NLNG considers supplying liquefied natural gas to domestic market


The Nigerian LNG is considering supply liquefied natural gas to the Nigerian market to help Africa’s largest economy dent an acute energy poverty that sees industries spend over a quarter of their revenue on power generation.

BusinessDay gathers that this initiative was discussed recently at an exploratory meeting in Lagos recently with stakeholders in the LNG value chain. The company sees this move as a possible catalyst for industrial growth in the country.

According to a WorldBank study, erratic power supply in Nigeria results in over $29billion loss to the economy. This has given rise to different businesses seeking opportunities to address this energy gap. It has spawned the off-grid sector with new investors moving to supply power to rural communities.

NLNG, by this initiative could allow power plants comatose due to absence of gas feedstock come on stream. Power plants built over ten years ago are not operational because they are located far away from gas sources. The NLNG plan to supply local market LNG may just be what is required to galvanise these plants into action.

LNG is a super-cooled natural gas, chilled to -160 degrees Celsius to condense and reduce the volume which allows for cost-effective transportation over long distances. The company produces around 22 million tonnes per annum of LNG from its six-train plant on Bonny Island.

LNG buyers take delivery of their volumes in receiving facilities spread across the Atlantic Basin in countries such as Spain, France, Portugal and Italy. Now the company is considering producing volumes of the LNG for domestic consumption.

In the past, the company has supplied natural gas liquids including LPG a by-product of natural gas liquefaction process to the domestic market. It commenced supply of LPG to the Nigerian domestic market in 2007.

According to the company information on its website, it has signed Sales and Purchase Agreements (SPAs) with 15 off-takers (all Nigerian companies) in which the company is committed to deliver up to 250,000 tonnes of LPG into the Nigerian market annually, in line with the commitment to grow the domestic LPG market in Nigeria.

“When operational, it has the potential to stimulate the economy through increased industrial activities in line with NLNG vision of helping to build a better Nigeria,” an official of the company said.

However, this will require the construction of receiving facilities for the gas before they are used to produce power. Under the arrangements such as the Eligible Customer, power producers have the ability to sell power directly to electricity consumers especially large industries, estates and educational facilities.

Nigeria’s power generation has lagged its peers with average power available on the national grid for distribution hovering between 3000 and 4000MW. Industries have had to depend on private power generation to remain competitive while others run diesel-powered generators which pollute the environment and raise cost.