Commodities

Gas Scarcity Inevitable as NLNG Shut Operations Due to High Floodwater

Nigeria Liquefied and Natural Gas (NLNG) declared a force majeure to its partners due to widespread flooding that has disrupted supply.

Published

2 years ago

October 18, 2022

Investors King

Nigeria Liquefied and Natural Gas (NLNG) declared a force majeure to its partners due to widespread flooding that has disrupted supply.

This declaration could worsen Nigeria’s revenue and foreign exchange scarcity which is already at an abysmal situation.

Force majeure is a clause in contracts which essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties happens.

Such events or circumstances could be war, strike, riot, crime, epidemic or sudden legal changes which could prevent one or both parties from fulfilling their obligations under the contract.

Investors King had earlier reported that the production capacity of the Nigerian Liquified Natural Gas Limited (NLNG) has dropped by 40 percent. The drop was a result of overwhelming theft and the vandalism of oil and gas pipelines.

No doubt, the subsequent cease of operation will further worsen the gas situation in Europe. Nigeria is a major supplier to some European countries, particularly Portugal.

It will be recalled that Portugal Energy Minister, Duarte Cordeiro stated that his country could face supply problems this winter if Nigeria did not deliver all its supplies.

Europe has been in the middle of gas shortage since the European Union put an embargo on the importation of Russian gas due to its invasion of Ukraine.

Several countries in Europe including the UK are already at serious risk of gas shortage.

According to the chief executive of Shell, Ben van Beurden, he noted that the shortage of gas in Europe could last for several winters.

“It may well be that we will have a number of winters where we have to somehow find solutions,” he said.

According to the spokesperson of NLNG, Andy Odeh, “The notice by the gas suppliers was a result of high floodwater levels in the operational areas, leading to a shut-in of gas production which has caused significant disruption of gas supply to NLNG,”

Odeh however stated that NLNG is in process of examining the extent of the disruption and would try to mitigate the impact of the force majeure.

Meanwhile, before the force majeure, Investors King understands that production from NLNG’s six-train Bonny plant had dropped to 16.8 million tonnes in 2021, from 20.7 million tonnes capacity in 2020. This has caused the company to lose more than $7 billion in revenue.

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Commodities

Agric Industries Take Interest In Unlocking Nigeria’s $10bn Palm Oil Export Potential

Published

23 hours ago

November 4, 2024

Ugwoke Ogbodo

Some agric-focused industries and firms have indicated interest in enhancing Nigeria’s agricultural productivity and competitiveness through the nation’s $10 billion palm oil export potential.

At the launch of a new report by a research and advisory firm, Vestance, significant untapped opportunities within Nigeria’s oil palm sector were revealed.

Discussing how the nation could regain its lost glory in palm oil production and exportation, stakeholders in the sector emphasised the need for government agencies, private sector investors, smallholder farmers, research institutions, and development partners to work together to help change the narratives in the palm oil sector.

Titled “Reclaiming Lost Glory: Nigeria’s Palm Oil Renaissance,” the report, which was unveiled in Lagos disclosed that Nigeria, despite being a major producer historically, currently exports only $1.34 million in palm oil, ranking 78th globally, while importing $372 million annually

Vestance’s Research Lead, Razaq Fatai, said the report illustrates the immense opportunities lying dormant in the country’s underutilised oil palm plantations, noting that by capitalising and rejuvenating these plantations, Nigeria could generate over $10 billion in export revenue alone.

He explained that Nigeria’s palm oil production began to decline during the country’s civil war between 1967 and 1970, saying, it is now time to begin to reverse the decline and put the sector back on track.

Speaking at a panel session on ways to revitalise the oil palm sector, experts proffered means by which challenges confronting the palm oil sector could be tackled.

In his submission, the Managing Director, SWAgCo (O’dua Investment Group), Dr. Adewale Onadeko, said Nigeria should embrace an agro-industrial cluster strategy, adding that essential infrastructure such as seeds, fertilisers, extension services, processing, and storage facilities should be prioritised if the expected gains could be realised.

Another panellist, Dr. Bayo Ogunniyi, Country Programme Analyst for International Fund for Agricultural Development, highlighted the myriad challenges facing smallholder farmers, particularly the lack of access to finance and the prevalence of old, low-yield seeds.

He underscored the urgent need for Nigeria to distribute high-quality seeds to smallholder farmers to enhance production levels.

Ogunniyi also pointed out that the oil extraction rates of smallholder palm oil processors are alarmingly low, often falling below 15 percent, compared to the 25 percent extraction rates achieved by modern processing mills. Improving these extraction rates is crucial for maximising the output from Nigeria’s palm oil sector.

In his own contribution, CEO of BulkDirect, Ramses Najem, emphasised the importance of situating processing facilities closer to the farms to reduce transportation challenges.

Other speakers at the report launch called for a nationwide adoption of high-yield seeds to boost production, investment in modern processing facilities to increase oil extraction rates, and the development of strategic transportation networks to streamline the supply chain.

Commodities

Cooking Gas Prices Surge Amidst Import Reliance, NIPCO CEO Calls for Local Refinery Support

Published

3 weeks ago

October 15, 2024

Yetunde Olugbenga

Just like the surge in fuel pump prices, the price of Liquefied Petroleum Gas (LPG), commonly known as cooking gas, has increased.

The Managing Director/Chief Executive Officer of the Nigerian Independent Petroleum Company (NIPCO) Plc, Suresh Kumar, has urged the Federal Government to encourage Dangote Refinery and other domestic refineries to produce LPG to help lower the soaring price of cooking gas.

According to experts, the increase in cooking gas prices was due to insufficient local production.

Meanwhile, at the recently concluded National Conference of the Nigerian Association of Liquefied Petroleum Gas Marketers 2024, held in Lagos, Kumar revealed that over 60 percent of the cooking gas consumed in Nigeria is imported, which is a major factor behind the price hike.

Kumar acknowledged that support for local refineries would boost cooking gas production and reduce LPG importation.

“There is hope that reliance on imported LPG will decrease, which will positively influence domestic prices. Greater local production will make LPG more affordable since it reduces exposure to foreign exchange fluctuations and international pricing dynamics,” he stated.

Kumar further noted that the Federal Government should provide financial aid by investing in local refineries to accelerate LPG production, meet public demand with adequate supply, and reduce costs.

“We must work with the Nigerian Midstream and Downstream Petroleum Regulatory Authority and other stakeholders to end gas flaring in the country. Substantial investments are needed to capture and process flared gas to increase domestic supply beyond the current 1.5 million MT to at least 5 million MT annually,” he reiterated.

As of the time of this report, Investors King gathered that in the Osogbo area of Osun State, the price has risen from N1,400 to N1,500. In Ilorin, Kwara State, it is currently being sold for N1,500.

Meanwhile, in Lagos State, the current price is N1,400, compared to the previous price of N1,300.

Commodities

Federal Government Expands Subsidized Rice Program to Lagos, Kano, and Borno

Published

1 month ago

October 2, 2024

Bassey Marshall

The Federal Government has announced that Lagos, Kano, and Borno will be the next states that will benefit from its subsidized rice program aimed at addressing economic hardship in the country.

The initiative aims to sell a 50kg bag of rice for ₦40,000.

According to a director at the Federal Ministry of Agriculture and Food Security, plans are already underway to roll out the food subsidy program in these states.

Investors King learned that since the launch of the subsidized rice program in September, only civil servants in Abuja, the Federal Capital Territory (FCT), have benefited from it.

However, the director revealed that the government is ready for the next phase of the program, which will help address growing food insecurity in Nigeria.

The source disclosed that the next phase, set to begin shortly, is part of a broader strategy by President Tinubu’s administration to ensure that no Nigerian goes to bed hungry.

The official also dismissed reports that the sale of subsidized rice has been suspended in Abuja, clarifying that the intervention is still in its early stages.

According to him, while the ministry is actively coordinating with other states, sales are ongoing in Abuja.

“As I speak to you now, we are about to activate sales in Lagos and Kano states, with Borno State also set to be addressed,” the agriculture ministry official stated.

“We’ve barely started; how can we stop? Sales are ongoing, and we are actively engaging with other states,” he added.