Currency Shortage Hits Gas Suppliers, Price Rise Imminent

There are indications that gas prices will rise further and Nigerians may pay more as traders have hinted that the high exchange rate of the dollar to the naira is having a negative impact on imports.

National Operations Controller, Independent Petroleum Traders Association of Nigeria, IPMAN, Mike Osatuyi, in a chat with The PUNCH on Sunday, said independent traders are sourcing dollars for importing from the black market, from where the price of gas would continue to rise until the naira strengthens in the foreign exchange market.

“Our members, who are still selling gas, bought 20,000 metric tons at about 11 million naira last month, but now the price has risen to 12.3 million naira for 20 000 metric tons,” he says.

He noted that gas consumers were at risk of further price increases as long as the dollar continued to strengthen.

In addition to low gas supplies in the international market, mainly due to the Russian-Ukrainian war, The PUNCH also learned that the gas production of the Nigerian company Liquefied Natural Gas Ltd, NLNG had dropped.

According to sources familiar with the matter, the decline in production was mainly due to high profile theft as well as vandalism of oil and gas pipelines which had left NLNG operating at 60% capacity.< /p>

The source also cited "supply gas stress and high maintenance activities" among the causes.

Production and exports from NLNG's six-train Bonny plant fell to 16.8 million tonnes in 2021 from 20.7 million tonnes in 2020 and 2019.

NLNG is believed to have lost nearly $7 billion in revenue so far in 2022 due to gas supply constraints, according to the company's chief production officer, Adeleye Falade, who spoke at the 45th Nigeria International Conference and Exhibition 2022.

Global natural gas markets have been tightening since 2021 and global gas consumption is expected to decline by 0.8% this year due to a record 10% contraction in Europe and rising demand. stagnant in the Asia-Pacific region, the IEA said in its quarterly gas market report.

Persistent underinvestment, coupled with the continuing problem of oil theft from pipelines, has plagued the Nigerian oil and gas sector in recent years.

Oil majors have stopped investing in Nigerian supply, and many foreign companies have either sold assets or signaled plans to divest.

Nigeria's crude oil exports plunged to 900,000 bpd in August, the lowest level ever recorded by the country, according to OPEC statistics. The country was 700,000 bpd behind its OPEC quota in August.

As a result, The PUNCH has learned that overseas customers, who had booked gas supplies, are currently experiencing fears as production at Bonny Island drops to a record level.< /p>

Portugal, one of Nigeria's main importers, has expressed concerns over supplies.

Portuguese Minister for the Environment and Energy of the European Union, Duarte Cordeiro, has said his country could face supply problems this winter if Nigeria does not deliver not all of its supplies.

"From one day to the next we may have a problem, such as not being supplied with the expected volume of gas," he said in Lisbon, adding that the country was already considering alternative supplies.

The PUNCH has learned that Nigeria's other European countries are also considering alternative supplies due to NLNG uncertainties.

Oil and gas expert and analyst Dr. Dauda Garuba called the low gas production a "double tragedy for Nigeria", adding that the country was facing tougher times. difficult in terms of income.

"This means the country should expect lower revenues. These are tougher times for Nigeria because when we have less to export, we count our losses," he said. -he declared.

Faculty member of Lagos Business School, LBS, and director of the Center for Applied Economics at Pan African University, Dr Austin Nweze, told The PUNCH "it is sad that the Nigeria has not been able to meet its customer demand.”

He said it meant a loss of income for the country, noting that everything should depend on planning so that the country does not depend on a single source of production.

"And it's not a good business strategy to disappoint customers because they will be forced to look for alternatives as is happening now," he said, adding that the federal government should have a business recovery plan that has allowed the country to bounce back from wallowing in lost revenue.