Forex Scarcity Hits Gas Suppliers, Price Hike Imminent

The high exchange rate of dollar to naira might see Nigerians pay more for gas with indications that the price might rise.

Marketers in their reaction to the high exchange rate of dollar to naira hinted that it has a negative impact on importation.

The National Operations Controller, the Independent Petroleum Marketers Association of Nigeria, IPMAN, Mike Osatuyi in a chat with Punch said independent marketers sourced dollars for importation from the black market.

According to Osatuyi, the price of gas would continue to increase until naira strengthened at the exchange market.

Osatuyi said, “Our members, who still sell gas, bought 20, 000 metric tonnes at around N11 million last month, but now, the price has jumped to N12.3 million per 20, 000 metric tones.”

The IPMAN Controller said gas consumers stands the risk of further price hike as long as dollar continued to strengthen.

The war between Russia and Ukraine has affected the supplies of gas.

Gas production from the Nigerian Liquefied Natural Gas Ltd, NLNG has plummeted.

According to sources close to the matter, the drop in output was majorly due to the high-leveled theft as well as oil and gas pipeline vandalism which had left NLNG operating at 60 per cent capacity.

The source also cited “feed gas constraint and high maintenance activities” as part of the causes.

Output and export from NLNG’s six-train Bonny plant had dropped to 16.8 million tonnes in 2021, from 20.7 million tonnes in 2020 and 2019.

The General Manager, Production NLNG, Adeleye Falade while speaking at the 45th Nigeria International Conference and Exhibition 2022 said NLNG lost almost $7bn revenue so far in 2022 due to gas supply constraints.

IEA in its quarterly gas market report disclosed that the Natural gas markets worldwide have been tightening since 2021 and global gas consumption is expected to decline by 0.8 per cent this year as result of a record 10 per cent contraction in Europe and flat demand in the Asia Pacific region.

Persistent under-investment, coupled with the perennial problem of oil theft from pipelines, has plagued Nigeria’s oil and gas sector in recent years.

Oil majors have drawn back from investing in Nigerian supply, and many foreign firms have either sold assets or signaled divestment plans.

Foreign customers, who had booked for gas supplies, are currently experiencing fears as the country’s Bonny Island output falls to a record low.

Portugal, one of Nigeria’s major importers, has expressed concerns over supplies.

Portugal’s European Union, EU Environment and Energy Minister, Duarte Cordeiro, said his country could face supply problems this winter if Nigeria did not deliver all its supplies.

Cordeiro who noted that country is already considering alternative supplies said in Lisbon, “From one day to another, we may have a problem, such as not being supplied the volume of gas that is planned.”

Other European countries are also considering alternative supplies due to uncertainties from NLNG.

Oil and gas expert and analyst, Dr. Dauda Garuba, described the low gas production as a “double tragedy for Nigeria,” adding that the country faced tougher times in terms of revenue.

“This means the country should expect lower revenue. These are tougher times for Nigeria because when we have less to export, then, we would be counting our losses,” he said.