Nigeria’s LPG Demand In A Growth Surge

Adoption of liquefied petroleum gas as a clean cooking solution is lagging behind Kenya’s 2030
development goal, despite several government initiatives taken along the LPG value chain. The
government’s strategy has so far focused on reducing the cost of LPG and increasing its use among lower-
income Kenyans. Sustainable uptake might be accelerated by taking vigorous regulatory steps to reduce
the consumer price and minimize unlicensed LPG sales, reviewing the economics underpinning the
intervention scheme, creating an enabling environment for LPG adoption by upper- and middle-income
groups, developing annual uptake targets, and devising a better metric for measuring progress toward those
targets.

Nigeria is a sleeping giant with an annual consumption capacity of five million metric tonnes per annum

LPG is a co-product from the refining of crude oil and is also extracted from natural gas and oil
production. Traditionally, much of the LPG produced during these processes was disposed of through
flaring. This not only compromised the environment it wasted a useful and high-quality energy resource.

Ni

Utilisation of liquefied petroleum (LPG) gas as a clean cooking in Nigeria has exceeded 150,000 metric
tonnes per year (MMTPA), more than doubling the demand five years ago.

The LPG utilization policy was set by the Federal Government of Nigeria to reduce the rate of
deforestation and to embrace the WHO strategy.
"Our goal is to continue to push for the adoption and penetration of LPG across the country, ensuring that
the product is available to consumers and of course position ourselves to harness the benefits of when the
market takes a corner and the country is poised to achieving its consumption potential.

In furtherance of the Presidential LPG Expansion Initiative aimed at deepening the usage and fully integrate
the product into Nigeria's energy mix, our first stage plan is to start with a10 tons capacity bob jack truck to
supply LPG to Retail customers around Lekki area and then grow to size with measurable income and
growth every year to stability for five years. Stabilize at year 5 with trucks for lots of supplies and gas
processing and storage plant, then ramp up with a quantum leap to the next level.

“The increase is still far short of the Nigerian government’s aspiration for a per capita LPG demand of
3.7kg per person, or 576,000MMTPA. A raft of intense publicity of the value of LPG over other alternative
fuel sources, as well as projects aimed at enhancing the supply of the product, have clearly led to the
demand shift.

Current LPG consumption in West Africa is estimated to be about 360,000 tonnes per year. Utilization

of LPG as household fuel has been expanding in several countries in West Africa since the early 1990s,

but average per capita consumption in the region remains low by international standards.

The most common household fuels in West Africa are wood and charcoal. Heavy use of these fuels is

contributing to the rapid rate of deforestation that is occurring in the region. Deforestation is seen as a
longterm

environmental threat that can probably only be effectively combated by substitution of wood and

charcoal fuels with alternate fuels such as LPG, natural gas, or petroleum products (such as kerosene).
LPG

is a particularly attractive alternative to wood and charcoal, since it is a clean, efficient fuel that is
relatively

easy to transport, store, and distribute. It produces no toxic fumes and is considered by most consumers,
the

domestic fuel of choice.

The recent expansion of the LPG industry in several countries has demonstrated the long-term potential
for

the region. LPG has already made important contributions to the environment and quality of life for the

people in West Africa that are using this fuel in their households.

The World Bank and the World LP Gas Association have retained Purvin & Gertz, Inc. (Purvin & Gertz)
and

Frigo Consult to conduct an analysis of the West African LPG market and make recommendations on
how

to further stimulate the LPG industry in the region and make improvements in operations and safety.

The consulting team visited the four focus countries in this study - Cameroon, Côte d’Ivoire, Ghana, and

Senegal. Information was obtained on the local LPG market in each of these countries and key industry
and

government officials were interviewed during these visits. Limited plant visits were made in these four

countries to review overall operations, bottle/valve distribution systems, major equipment ratings, and

product specifications.
“This requirement was meant to be met as of 2008”. The NLNG, however, notes that the trend is on
course.

“Increased usage of LPG in the domestic market helps reduce environmental despoliation; create
employment from new business opportunities; reduce respiratory health problems attributable to wood
smoke and reduce poverty: low LPG usage is an index of poverty”.

This is inline with the

The Department of Petroleum Resources (DPR) has called for improved

awareness on the use of Liquefied Petroleum Gas (LPG) to boost its
consumption in line with Federal Government’s aspirations.

In 2008, the national yearly demand was less than 60,000 MMTPA, according to the Nigerian Liquefied
Natural Gas(NLNG), the country’s largest provider of the product.

Some of the entities who have been part of the campaign are Oando, the integrated energy company
and the Lagos State Government.
On July 27, 2013, NLNG announced an increase in the quantity of LPG (cooking gas) it supplies to the
Nigerian Market from 150,000 metric tonnes to 250,000 metric tonnes.

“This sixty-seven percent (67%) increase will enable ample stock of the alternate fuel and promote the
use of cooking gas – necessary for its salutary effects on the environment, including its role in controlling
deforestation”, the NLNG said in a release.
“Nigeria LNG Limited currently provides over 70% of cooking gas used in Nigeria, and the current
increase arose from its recent survey of the domestic market”, which showed that the consumption had
more than doubled the less than 60,000MTPA when NLNG intervened in 2008 with domestic supply of
cooking gas.

“The increase is still far short of the Nigerian government’s aspiration for a per capita LPG demand of
3.7kg per person, or 576,000MMTPA”, says Jerry Tolkein, an energy analyst based in Cairo. “This
requirement was meant to be met as of 2008”. The NLNG, however, notes that the trend is on course.

“Increased usage of LPG in the domestic market helps reduce environmental despoliation; create
employment from new business opportunities; reduce respiratory health problems attributable to wood
smoke and reduce poverty: low LPG usage is an index of poverty”.

Babs Omotowa, Managing Director, Nigeria LNG Limited said that he was extremely delighted that
NLNG, true to its vision to help build a better Nigeria, is able to increase its supply of domestic gas. The
assurance of steady supply should increase investors’ confidence in the cooking gas industry, an industry
which currently needs investments in storage, transportation, and cylinders.

Omotowa stated that he was hopeful that the domestic market will grow even beyond cooking gas, to low-
cost retrofitting of cars, to use both gasoline and natural gas; as LPG is less expensive than petrol.

NLNG is a Nigerian Joint Venture company whose shareholders are the Nigerian National Petroleum
Corporation (49%), Shell (25.6%), Total LNG Nigeria Limited (15%) and ENI International (N.A.) S.a.r.l
(10.4%).