Nigeria Liquefied Natural Gas Limited (NLNG) has identified a perfect storm of factors, including vessel scarcity, foreign exchange rate fluctuations, and soaring oil prices, as the primary drivers behind the recent escalation in cooking gas prices in the country. The company, in an official statement released on Wednesday, outlined the intricate interplay of domestic macroeconomic developments and global dynamics leading to a squeeze in the supply of liquefied petroleum gas (LPG) within the domestic market.
According to a recent market survey, the price of 20 metric tons of cooking gas at the terminal soared from N10 million at the beginning of the month to N14 million as of October 20. NLNG, in its statement, clarified that the domestic LPG market is subject to dynamic market forces and various external factors, emphasizing the impact of changing exchange rates, rising price benchmarks linked to crude oil, and the vessel scarcity induced by the Panama Canal drought.
Despite these challenges, NLNG highlighted its pivotal role in the substantial growth of the domestic LPG market. The company’s efforts have contributed to a remarkable increase in the market, growing from less than 50,000 metric tons of imported LPG in 2007 to over 1.3 million metric tons of both domestic and imported LPG today.
NLNG, acknowledging feed gas supply limitations, asserted its commitment to actively participating in LPG deliveries, ensuring a consistent supply of cooking gas to consumers nationwide. The company disclosed its commitment to delivering over 450,000 metric tons per year of butane, the main component in cooking gas, and expanding its domestic propane supply to further boost the market.
Despite facing feed gas challenges, NLNG continues to supply LPG to the domestic market, constituting approximately 40 percent of the total market volume. Since the beginning of the year, NLNG has delivered over 380,000 metric tons of LPG using its dedicated LPG vessel, maintaining an unwavering commitment to ensuring a reliable supply at prices reflective of market dynamics.
The company emphasized its collaboration with relevant industry stakeholders to achieve this objective, remaining steadfast in its mission to secure the reliable supply of LPG production to the domestic market amidst the current challenges.