Cooking Gas Prices May Rise As NLNG Supply Plunges By 80%
Operational crisis at Bonny Island facility triggers supply shortages, threatens price hikes.
Lagos, Nigeria – Consumers may face further increases in cooking gas prices as the Nigeria Liquefied Natural Gas (NLNG) Limited grapples with an 80% plunge in gas supplies due to operational challenges at its Bonny Island facility. The crisis, fueled by persistent pipeline vandalism, has raised concerns about Nigeria’s ability to meet domestic and international gas demands.
“Until we can safeguard these pipelines, we will continue to underperform.”
The Supply Crisis
NLNG, a major supplier of Liquefied Petroleum Gas (LPG), has seen its gas supplies drop to just one-fifth of its operational needs, according to sources familiar with the matter. The company, which operates six production units (trains), is currently running only two trains due to the disruption.
Philip Mshelbila, Managing Director of NLNG, highlighted the severity of the situation during a panel session at the Nigeria International Energy Summit:
“At the current moment, I am only running two trains out of six. Energy security has to be seen as important as national security. However, gas security has deteriorated, and until we can safeguard these pipelines, we will continue to underperform.”
Global and Domestic Impact
The supply shortfall has far-reaching implications:
- Domestic Market: Cooking gas prices, already on the rise, are expected to surge further, adding to the financial burden on households and businesses.
- Global Market: Nigeria’s LNG exports declined by 40% in February, tightening global supply and potentially driving up spot prices. Europe and Asia, which rely heavily on Nigerian gas, are particularly vulnerable.
Data compiled by Bloomberg shows that in 2024, nearly half of Nigeria’s LNG exports went to Asia, with another third to Europe and the remainder to the Americas and Middle East.
Economic Consequences
The prolonged outage poses significant economic risks for Nigeria:
- Revenue Loss: NLNG contributes billions of dollars annually to the national treasury. The current crisis threatens projected dividends of N727 billion by 2025, a 113% increase from N346 billion in 2023.
- Foreign Exchange Reserves: Reduced export earnings could further strain Nigeria’s foreign exchange reserves, exacerbating economic challenges.
Root Cause: Pipeline Vandalism
The crisis stems from repeated attacks on gas pipelines by militant groups and criminal syndicates in the Niger Delta. These acts of sabotage have severely hampered NLNG’s operations, forcing the shutdown of four production trains.
Calls for Action
Experts and industry leaders are urging the government to prioritize the security of gas infrastructure. Mshelbila emphasized the need for a reevaluation of energy security, stating:
“Until we can safeguard these pipelines, we will continue to underperform.”
IDNN will continue to monitor developments and provide updates as more information becomes available.