Why cooking gas prices are rising – NLNG

Nigeria LNG Limited (NLNG) has dismissed “as speculative and indicative of a fundamental misunderstanding of Nigeria’s intricate market dynamics,” media reports suggesting that a price hike by the company is responsible for the surge in the price of domestic Liquefied Petroleum Gas (LPG) otherwise known as cooking gas in the domestic market.

The media reports, according to a statement by Andy Odeh, NLNG’s General Manager, External Relations and Sustainable Development, are also predicting that scarcity of the product looms as a consequence.

The company detailed the far-reaching contributions of NLNG to the domestic LPG market, including delivery of “over 1.3 million metric tons of both domestic and imported LPG today,” delivery of “over 450,000 metric tonnes per annum of Butane, the main product in cooking gas,” and “commitment of its entire Butane and Propane production to the domestic market from 2023.”

The statement said further that the company has in addition, continued to supply LPG to the domestic market, accounting for approximately 40 per cent of the total market volume, despite feed gas challenges, stressing that “since the beginning of the year, NLNG has delivered over 380,000 metric tonnes of LPG using the Company’s dedicated LPG vessel.”

While maintaining its commitment to ensuring reliable supply of its LPG production to the domestic market at prices that are reflective of the market, the company noted that the domestic LPG market, “like any other, is subject to dynamic market forces and various external factors.”

The statement listed some of these factors, which could have had significant effect on energy prices in the recent times and could undoubtedly be some of the reasons for recent price hikes witnessed in the domestic market, to include “changes in exchange rates, and escalating price benchmarks mirroring crude oil prices, and the Panama Canal drought-induced vessel scarcity impacting transport costs especially for imported LPG.”

Full text of the statement reads:

LPG Price in Nigeria

Nigeria LNG Limited (NLNG) has noted media reports insinuating that a price hike by the Company is responsible for the surge in the price of domestic Liquefied Petroleum Gas (LPG), commonly known as cooking gas, in the domestic market and predicting that scarcity looms as a consequence.

NLNG dismisses these media reports as speculative and indicative of a fundamental misunderstanding of Nigeria’s intricate market dynamics.

NLNG has been making defining contributions to the domestic LPG market, spurring the steady growth of the nation’s DLPG market volume from less than 50,000 metric tonnes of imported LPG in 2007 to over 1.3 million metric tons of both domestic and imported LPG today. NLNG currently delivers over 450,000 metric tonnes per annum of Butane, the main product in cooking gas and has embarked on domestic propane supply to further grow the market.

The Company has committed its entire Butane and Propane production to the domestic market from 2023 and despite feed gas challenges, continues to supply LPG to the domestic market, accounting for approximately 40% of the total market volume. Since the beginning of the year, NLNG has delivered over 380,000 metric tonnes of LPG using the Company’s dedicated LPG vessel.

NLNG has remained committed to delivering domestic LPG to locations as close to the market as possible by diversifying delivery points starting with Lagos in 2023, fostering competition among terminal owners and ultimately reducing consumer supply chain costs. Efforts are ongoing to reach terminals in Warri and Calabar as soon as the challenges limiting safe delivery of volumes to these other locations are cleared.

The domestic LPG market, like any other, is subject to dynamic market forces and various external factors. Such factors as changes in exchange rates, and escalating price benchmarks mirroring crude oil prices, and the Panama Canal drought-induced vessel scarcity impacting transport costs especially for imported LPG, have had significant effect on energy prices in the recent times and could undoubtedly be some of the reasons for recent price hikes witnessed in the domestic market.

NLNG maintains an unwavering commitment to ensuring the reliable supply of its LPG production to the domestic market at prices that are reflective of the market. The Company is collaborating with relevant industry stakeholders to achieve this objective and will remain focused on achieving its mission through this avenue among others.