The Nigeria Liquefied Natural Gas (NLNG) Limited says it has lost almost $7 billion revenue so far in 2022 due to shortage of gas supply.
The revenue loss can be attributed to the increasing security challenge which has hit the oil and gas companies across the country and has negatively been impacting the production and revenues of the NLNG.
This was made known by NLNG’s General Manager, Production, Adeleye Falade, during a panel session at the 45th Nigeria International Conference and Exhibition (NAICE) 2022, with the theme: “Global Transition to Renewable and Sustainable Energy and the Future of Oil and Gas in Africa,” on Wednesday, August 3, 2022, in Lagos.
Falade, who represented NLNG’s Managing Director, Dr Phillip Mshelbila, said the company’s 22 million tons per day plant’s production currently trends at 99.4% year-to-date availability while utilisation hovers around 68%.
He said the data between the 99.4% availability and the 68% utilisation at the moment, which was equivalent to $7 billion revenue, was part of the effect of the critical oil and gas pipelines that were shut down due to insecurity at the facilities.
What the NLNG top official is saying
Falade lamented that the unavailability of important gas pipelines like the Abuja-Kaduna-Kano (AKK) Pipeline and the lack of gas pipelines in the eastern corridor for distribution were impacting negatively on their production.
- He said, “I’ve spoken eloquently about the AKK Pipeline. In the eastern corridor, we also don’t have enough pipeline distribution pipeline. But the ones that we have, what has happened to them? Today, Trans-Niger Pipeline, which is the main artery in the eastern region, had been down since March. We don’t know when it’s going to come back.
- “As a result of that, I don’t have gas in the LNG to run my plants. Currently trending 99.4 per cent year-to-date availability, my utilisation is moving around 68 per cent.
- “The data between that 68 per cent and the 99.4 per cent is equivalent of almost $7 billion revenue today, which would have found its way into our economy, which would have helped our government in a cash-constrained world. And I’m not talking about the impact of upstream.
- “So what is the guarantee around the security of even the pipeline that we have? And everybody has a role to play in that: government, security agencies, have a role to play.”
Going further, Falade said that based on the work done by the Decade of Gas policy, there was a clear three billion cubic feet (3BCF) gap between gas demand and supply, raising doubts about bridging that gap considering the lack of infrastructure and investment.
What you should know
Insecurity and sabotage, especially crude oil theft, have become the bane of the oil industry in Nigeria, making it impossible for the country to meet up with its Organization of Petroleum Exporting Countries (OPEC)’s quota and its revenue projection in recent years.
Nigeria has been experiencing some of the worst crude oil theft in its history with millions of dollars lost daily. There have been several allegations of complicity levelled against security agencies following the increasing incidents of crude oil theft.
The Federal Government had revealed that Nigeria lost about $1 billion in revenue to pipeline vandals and oil thieves in the first quarter of 2022.
The Chairman of Heirs Holdings, Tony Elumelu, had earlier stated that Nigeria was losing over 95% of its oil production to thieves.
Also lamenting the challenge his company and many others were facing in dealing with security of production facilities and losses in the Niger Delta, Igiehon said the problem has reached an existential level.
Meanwhile, Nigeria has failed to take advantage of the gas supply crisis in Europe and other developed economies due to the Russia-Ukraine war, despite pressure from the European Union (EU) for additional gas supplies to the bloc from the country as it gets set to cut supply from Russia.
SOURCE: Nairametrics
