Marketers have hinted that the high dollar-to-naira exchange rate is affecting imports, so there are signs that gas prices will continue to rise and Nigerians may pay more.
In a conversation with The PUNCH on Sunday, National Operations Controller Mike Osatuyi of the Independent Petroleum Marketers Association of Nigeria, IPMAN, stated that independent marketers sourced dollars for importation from the black market. As a result, the price of gas would continue to rise until the naira strengthened at the exchange market.
He stated, “Our members, who still sell gas, bought 20,000 metric tons at approximately N11 million last month, but the price has jumped to N12.3 million per 20,000 metric tons.”
He said that gas customers could expect more price increases as long as the dollar stayed strong.
The PUNCH also learned that gas production from Nigerian Liquefied Natural Gas Ltd., NLNG, has plummeted, in addition to low gas supplies on the international market, primarily as a result of the Russian-Ukraine war.
Sources close to the situation say that the high level of theft and oil and gas pipeline vandalism that left NLNG operating at 60% capacity were primarily to blame for the drop in output.
The source also mentioned “high maintenance activities and feed gas constraint” as one of the reasons.
From 20.7 million tonnes in 2020 and 2019, output and export from NLNG’s six-train Bonny plant had decreased to 16.8 million tonnes in 2021.
Adeleye Falade, the General Manager, Production, of NLNG, who gave a speech at the 45th Nigeria International Conference and Exhibition 2022, said that gas supply issues had caused the company to lose nearly $7 billion in revenue thus far in 2022.
According to the IEA’s quarterly gas market report, natural gas markets worldwide have been tightening since 2021, and global gas consumption is anticipated to decrease by 0.8% this year as a result of a record 1% contraction in Europe and flat demand in the Asia-Pacific region.
In recent years, Nigeria’s oil and gas industry has been plagued by persistent underinvestment and oil theft from pipelines.
Numerous foreign companies have either sold assets or indicated plans for divestment, and major oil companies have stopped investing in Nigerian supply.
According to OPEC statistics, Nigeria’s crude oil exports fell to as low as 900,000 barrels per day in August, the nation’s lowest level ever.In August, the nation was 700,000 barrels per day short of its OPEC quota.
As a consequence of this, The PUNCH discovered that foreign customers who had made reservations for gas supplies are currently experiencing anxiety as the nation’s Bonny Island output reaches a record low.
Concerns about supplies have been voiced by Portugal, one of Nigeria’s largest importers.
Duarte Cordeiro, the Minister of Environment and Energy for the European Union and Portugal, stated that if Nigeria did not deliver all of its supplies, his nation might encounter supply issues this winter.
In Lisbon, he stated, “From one day to another, we may have a problem, such as not being supplied the volume of gas that is planned,” adding that the nation was already considering alternate sources of gas.
The PUNCH learned that NLNG’s uncertainties have led other European nations like Nigeria to consider alternative sources of energy.
Dr. Dauda Garuba, an oil and gas expert and analyst, said that Nigeria’s low gas production was a “double tragedy” and that the country was facing tougher revenue times.
The country should anticipate lower revenue as a result of this.Nigeria is facing more difficult times because we will be counting our losses when we have less exportable goods.
Employee at the Lagos Business college, LBS, and Head, Community for Applied Financial matters, Skillet African College, Dr. Austin Nweze, told The PUNCH “it is miserable that Nigeria has been not able to satisfy its clients’ need.”
He stated that this would result in a loss of revenue for the nation, noting that everything ought to be planned so that the nation would not rely solely on one source of production.
He added, “And, it is not a good business strategy to disappoint one’s customers because they will be forced to look for alternatives just as it is happening now.” Additionally, he stated that the Federal Government ought to have a business recovery plan that allowed the nation to bounce back in order for the country not to squander revenue.
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