The Nation Newspaper

Tag: LPG market

  • How Matrix Energy stabilised LPG market

    Kerosene, the popular common cooking fuel in most low and middle class homes, is scarce in the market, but nobody seems to have noticed this. In the past, kerosene scarcity used to be one of the national energy crises that bothered the government, but it is not so now, writes BOLAJI OGUNDELE.

    An indigenous player in the downstream sector of the oil and gas sector, Matrix Energy Limited, has explained why  Nigerians are not feeling the scarcity of kerosene, also known as dual purpose kerosene (DPK).

    He said the development was a result of evolution of an era in energy consumption.

    According to Matrix Chief Operating Officer Mr. Loqman Salam-Alada, the increase in the use of liquefied petroleum gas (LPG) in place of kerosene in most homes has reduced the use of kerosene.

    He said the visibility of LPG, also called cooking gas, against those of other hydrocarbon fuels, would continue to increase because of the huge edge it has over others. However, he disclosed that Matrix Energy  had been investing huge resources to make the product more readily available in all parts of the country, especially for the people of the Southsouth/Southeast and some parts of the Southwest.

    According to him, since the company opened its gas depot in Warri, Delta State last December, it has circulated more than 30,000 metric tons of LPG to various parts of the country.

    He said the company had, in a huge way, played a role in reducing the feverish influence of kerosene on the country by making the LPG a product that is no longer an exclusive preserve of the elite. This, he said, has been achieved by making the product more readily available through continuing investment into its Warri facility.

    He hinted of the acquisition of a Greek gas bearing vessel, MT Gremio. Its services were procured to supply  LPG regularly to avoid its sacrcity.

    Salam-Alada said: “Since the inauguration of our facilities in December, we have been able to do about 30,000 tons of LPG within that short period and now, to enhance the distribution of LPG across the nation. We have also secured the services of MT Gremio, a 5000-ton vessel, in a year contract. This will enhance our back-to-back supply of LPG. We will distribute across the Southeast, the Southsouth and the other parts of the country.

    “One significance of this development is that the increase in the supply and consumption of LPG has gradually phased the consumption of DPK out because there’s no DPK in the market and the impact of the scarcity is not felt and this is because more and more people are now moving away from using kerosene and turning to the use of cooking gas. This will continue because Nigeria’s consumption of LPG will continue to increase.

    “What the Matrix Energy gas facility has done is that it has expanded the consumption and the usage of LPG across the zone. Besides the expansion, it has also reduced the logistics challenges the marketer had before now to provide for the movement of products. Before now they used to spend a lot to move their products in trucks from Lagos to the Southsouth/Southsast and some parts of the Southwest, but now, our facility has brought the product closer to them; the price is the same as they would get it in Lagos because the cost of taking it from here to their destination has been knocked down to the lowest. This, again, is one reason why the consumption has sporadically increased; from December to April, we have done over 30,000 tons of LPG.

    “About MT Gremio, it was brought to Nigeria from Greece and it will be in the services of Matrix Energy for the next one year and the reason for bringing the vessel is to guarantee supply of LPG all year round. She brought almost 3,500mt last week and she’s due to bring another 4,000mt next week. This will be her continuous routine.”

    Salam-Alada, however, projected that the product would become more important in a matter of few years as many who are consumers of other petroleum products, like premium motor spirit (PMS), also known as petrol, as well as the automotive gas oil (AGO), also known as diesel, will gradually be turning to the LPG because of its financial and environmental advantages over them. It is because of such projections as these that Matrix had decided to commit huge resources into stabilising the LPG market across the country so that when the projected shifts in preference for energy source would shift to the gas, the shock would be drastically minimized.

    “We also project that as time goes on, many people will turn to the use of LPG for power generation. It’s part of reducing domestic logistics in the homes. Another point to consider is the fact that LPG is more environmental friendly, it’s greener, so in the long run, when you consider the effect on the environment, it is cheaper than other  hydrocarbon fuels, besides giving you more energy supply,” he said.

  • Operators mull building Nigeria’s LPG market to $10b

    • Step up training to enhance safe operations

    Players in the Nigeria’s Liquefied Petroleum Gas (LPG) subsector are putting measures in place to grow the LPG market to $10 billion in the next five years.

    The players, under the aegis of the Nigeria Liquefied Petroleum Gas Association (NLPGA), said they had projected the value for LPG market in the next five years to hit over $10 billion, but noted that the market must be built safely.

    The Chairman, Safety & Technical Committee of the NLPGA and Deputy President of the association, Nuhu Yakubu, told The Nation that prioritising safety through continuous training of all stakeholders has become imperative, considering the volatility of the commodity and the quantum increase in consumption in the past few years.

    To buttress the quantum increase in consumption, Yakubu said: “It is not cheap to build a gas terminal, but in the last five years a couple of private LPG terminals had sprung up in different parts of the country. The terminals include NAFGAS and NIPCO. Pipeline and Products Marketing Company (PPMC), an arm of the Nigerian National Petroleum Corporation (NNPC), is expanding its terminal while inland terminals (the butanisation plants) are being reactivated by the NNPC. More bottling plants have sprung up, the ones that have been idle are being activated, LPG road tankers, which is a critical component of the value chain, have increased.

    “By 2007, LPG road tankers were less than 100, but at the end of third quarter of 2017, it was in excess of 1000. So, there is a phenomenal growth across the entire LPG value chain as with the demand also. LPG demand by 2007 was 70,000 metric tons per annum and has risen to over 600,000 metric tons as at end of 2017.

    “There is no industry that has enjoyed such quantum leap as LPG, but we have to manage the fallout of this growth so that we don’t experience the kind of incidents we had in recent times. We have to thank God that there has not been worse incidents, that is to say that self-regulation to an extent has been playing out well for the industry.

    “For the number of LPG plants that have been rolled out in the last four years and the incidences that have occurred don’t come close to incidences in other sectors but there is lot of rooms for improvement.”

    On tackling incidents such as explosion, Yakubu said: “We are addressing the issue of the moment to the best we can. What the industry plans for the year and going forward, which involve addressing and mitigating the kinds of occurrences we have observed in the past few months, have been lined up. What we are interested in as the technical committee is on how to minimise occurrences. We have done a lot in the past and we want to step it up and improve on them so that we can minimise such occurrences in the sector.

    “LPG has been on the upward demand and there will be more demand for LPG this year and if something is not done about it proactively as we want to envisage, maybe more occurrences will happen. We want to carry along all the stakeholders in our activities including the press for proper reportage so the public will be aware of what to do or look out for.

    “In the recent past the Association has been very proactive about training. The training will be across board, from the producers end to plant operations and to domestic end (the consumers) even up to the cylinder and gas cooker fitters. The Association will continue to deepen that training and collaboration will cut across board.”

     

     

    Some of the government agencies are now seeing the importance of those trainings the Association has been projecting and are now lending support to it. So there will be a lot of collaboration between the Association and the agencies of government to ensure that some reasonable impact and propagation are given to those training programmes so that there will be more buy in.”

  • LPG market battles fake products, others, says NLNG

    The Liquefied Petroleum Gas (LPG) market is battling substandard products and other problems, the Manager, Marketing/Development, Nigeria Liquefied Natural Gas (NLNG), Abdulkahid Ahmed has said.

    Other problems besetting the growth of the market include inadequate vessels that would bring the product from the firm’s base in Port Harcourt, Rivers State to Lagos, inefficiency in shipping operation and  its attendant increase in  freight cost, and uneven distribution terminals.

    Speaking at a stakeholders’ forum last week in Lagos, Ahmed said the firm,  in spite of the challenging environment, has so far  supplied 700,000 metric tonnes of LPG into the market.

    He said NLNG has  increased the supply of LPG from 150, 000 metric tonnes to 350,000 in the last few years.

    According to him, analysis of the LPG supply chain and key challenges facing  the sub-sector carried out  by NLNG,  showed that   certain problems exist in the market.

    He said: ‘’There are problems  in areas such as shipping and supply of LPG to the consumers; manufacturing of LPG cylinders and other accessories; and facilities or terminals used in discharging the product to the oil marketing firms.”

    He lamented that the flooding of the market with substandard LPG was another major challenge.

    Ahmed said LPG is in  short supply in the country,because there is shortage of terminals to discharge the product to end users.

    ‘’The  jetties or terminals used for LPG are not many,  coupled with the fact that there is shortage of promoters in the sub-sector. “Though there is improvement in the environment  in which the  operators  operate, more needs to be done to develop the market,‘’ he added.

    He said there is no functional cylinder manufacturing plant in the country, stressing that the issue has resulted in the importation of cylinders and other accessories into the country.

    Ahmed said funding has constrained the capacity of  Nigerians to invest in production of  cylinders and other accessories locally.

  • LPG market reaches new highs

    LPG market reaches new highs

    With Greece’s bailout issue monopolising local and global news alike, an interesting development in the shipping market took place, the liquified petroleum gas (LPG) tanker markets have been pulling away, moving higher than before.

    In its latest weekly report, shipbroker Allied Shipbroking said that “the LPG market has been climbing to some of its highest levels. It has been of note that rates for VLGCs closed today at $136.250 per day (slightly lower than the peak rate of $136.375 achieved at the weekend) according to the Baltic LPG assessment, which translates to a TCE basis of well above $4million per month and is more than a 100 per cent increase from the $ 60.375 it stood in early January”.

    Allied’s George Lazaridis, Head of Market Research & Asset Valuations, noted that “at the same time, there has been an increasing amount of vessels been taken on for period time charters of up to 3 years. This has also led to higher demands in both the LGC and MGC markets where many hold a very bullish view and looking for ever higher premiums for any forward fixing. The main support for all of this has been an increasing appetite for imports by India, which has been the main driver of the market for almost a year now. At the same time and despite the firm demand from India, there is a general increase in activity driven by the overall stellar performance of all energy commodities”.

    Lazaridis added that “as such the firm demand will likely continue, possibly leading to a counter of the high number of vessels that had been ordered during 2013 and 2014, which now seem that they could more than easily be covered by the recent growth in demand.

    Elsewhere the market are also showing strong signs of life, with markets in Europe retaining their bullish outlook as expectations are for a flow of fresh inquiries to emerge in the North Sea region. In the U.S. Gulf, increased activity from refineries there are easily absorbed by traders while it looks as though we may be in sight for even higher volumes over the coming months. Demand has also remained firm in the East, with China countering most of the lag that has seemingly be left by Japan and S. Korea these past weeks. The only exception to this trend seems to be slightly softer interest in the MEG region though it looks as though this is of little concern with activity so abound in most of the other regions,” he noted.