To increase the contribution of Compressed Natural Gas (CNG ) and Liquefied petroleum gas (LPG) to Nigeria’s energy mix, there is a need for more investments and development of robust policies and regulations in the country, the CEO of Africa-focused downstream company, OVH Energy Marketing Ltd, Huub Stokman has said.
Renewed exploration in Nigeria, the largest holder of natural gas reserves in Africa pushed the country’s gas reserves to 206.53TCF however less than 20 percent of Nigeria’s natural gas goes to the domestic market despite huge demand.
Stokman said this can be corrected by deepening Nigeria’s LPG and CNG penetration through an enabling environment for more foreign direct investments.
“At the moment, there’s no clarity around the margins and the pricing of compressed natural gas in the market. We need to make sure we get a logical framework around it because without it we can’t get clarity,” Stokman told BusinessDay at the 4th Annual Nigeria International Petroleum Summit, (NIPS).
He noted that investors need clarity in terms of returns when making an investment in natural gas which is a clean energy consumption that benefits the environment and reduces Nigeria’s dependence on petroleum.
Nigeria is keen to grow its domestic gas utilisation to take advantage of its abundant resources while also reducing its citizen’s dependence on petroleum.
The government launched its National Gas Expansion Programme (NGEP) in December 2020, focusing on the distribution of autogas (CNG) and LPG across gas stations operated by state energy company Nigerian National Petroleum Corporation (NNPC).
S&P Global Platts Analytics expects this programme to displace only 10,000 bpd of gasoline in the near-term, “with the full impact of the conversion scheme to be felt more on a longer time horizon.”
Platts Analytics said the success of this program will depend on the low cost of installation of conversion units, the cost competitiveness of autogas/CNG fuel against gasoline, and easy accessibility of refueling stations.
Stokman said OVH Energy was working with other stakeholders to bring compressed natural gas to its customers.
He lauded the federal government for the declaration of the year 2021 to 2030 as the Decade of Gas.
“This is the decade for gas exploration. Nigeria has the largest natural gas reserve in Africa, and the 9th largest in the world, so Nigeria can leverage its reserves to diversify and promote local growth and OVH Energy Marketing is best placed to deliver to the local market,” Stokman said.
Stokman expressed optimism that the Petroleum Industry Bill would be passed soon by the National Assembly adding that an effective legislative framework was needed to attract investments to Nigeria’s oil and gas industry and create value across the value chain.
