Foreign exchange scarcity hits gas suppliers, price hike imminent

There are indications that Nigerians may pay more for gas as marketers have hinted that the high exchange rate of dollar to naira is having a negative impact on importation.

National Operations Controller, the Independent Petroleum Marketers Association of Nigeria, IPMAN, Mike Osatuyi, told The Punch on Sunday that independent marketers sourced dollars for importation from the black market, hence, gas price would continue to increase until naira strengthened at the exchange market.

He 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.”

Osatuyi noted that gas consumers stood the risk of further price hike as long as dollar continued to strengthen.

Apart from low gas supplies at the international market majorly due to the Russian/Ukraine war, it was also gathered that 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.

NLNG was said to have lost almost $7bn revenue so far in 2022 due to gas supply constraints, according to the company’s General Manager, Production, Adeleye Falade, who spoke at the 45th Nigeria International Conference and Exhibition 2022.

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, the IEA said in its quarterly gas market report.