Oil & Gas

Energy Crisis: Cooking gas shortage worsens amid Nigeria, Africa’s paltry 4% stake in global consumption

Access Bank
Nigeria’s cooking gas crisis may take a turn for the worse in the days ahead despite latest statistics that Nigeria and the continental Africa accounted for a paltry 4% of global Liquefied Natural Gas (LPG) consumption in 2020.

Executive Director, Sahara Group, Temitope Shonubi, disclosed this at the African Refiners and Distribution Association (ARDA) conference 2021 in South Africa where he spoke on the role of LPG in Africa’s energy transition.

Noting that LPG consumption in Africa is low compared to other markets, Shonubi added Africa’s consumption was 14MT (translating to 12 kilogram per person) in 2020, compared to Asia Pacific’s 108MT (27kg/person), North America’s 74MT (123kg/person), Europe and Eurasia’s 49MT (49kg/person), Middle East’s 38MT (60kg/person) and Latin America’s 34 MT (53kgs/person).

Shonubi noted that Africa had become reliant on imports to meet its LPG demand as a result of low crude oil refining capacity and absence of adequate wet gas being processed.

He said: “Africa’s refining capacity of 3,343,000 barrels per day is limited to just 20 countries; utilisation rates have fallen from about 75 per cent in 2010 to 55 per cent in 2020. Only six African nations have combined LPG storage capacity greater than 50,000MT.”

Shonubi spoke just as the Executive Secretary of the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM), Mr. Bassey Essien, disclosed that over one million metric tonnes of gas were consumed by Nigerians in 2020, with about 65 per cent of the product imported by marketers.

‘‘The shortfall is made up through importation. The implication is that the importers will embed expenses incurred into the price it sells LPG to marketers at the depots and terminals. This is then passed on to the end users of the product,’’ Essien said.

But to reverse the lagging LPG consumption figure for Africa, Shonubi disclosed that Sahara Group planned to invest over $1 billion to enhance access to LPG in Africa and emerging economies in a bid to boost energy transition on the continent.

Shonubi attributed the low LPG consumption in Africa to the hurdle of affordability, absence of large-scale LPG storage infrastructure, minimal vessels dedicated to the region, low set-up cost of firewood and kerosene stoves, as well as negative perceptions and fear of explosions due to poor safety standards, among other factors.

He said: “Africa’s refining capacity of 3,343,000 barrels per day is limited to just 20 countries; utilisation rates have fallen from about 75 per cent in 2010 to 55 per cent in 2020. Only six African nations have combined LPG storage capacity greater than 50,000MT.

“While set-up costs may be high, LPG has higher energy efficiency when compared to kerosene and fuel wood and it has virtual zero sulphur content. LPG is key to achieving the UN SDG 7 – Sustainable Development Goal of Universal Access to Energy.”

According to him, converting just 30 per cent of Africa’s vehicle fleet to run on LPG would result in $3bn annual fuel-cost savings and about 40 billion in CO2 emission reductions, while indirect cost savings from health and infrastructure would exceed $15 billion annually.

On the role of African governments in encouraging LPG adoption, Shonubi canvassed an enabling policy environment to foster adequate private sector involvement and sustainability, advising that funding should be channelled into country-wide investment programmes while megaprojects and regional integration should be accelerated in order to efficiently serve a larger population and grow the economy for multiple countries.

The Sahara Energy Executive Director also advocated growing Africa’s LPG consumption through investments in LPG infrastructure and financing of LPG use through credit schemes, Pay-as-you-use, penalty for emissions, reward for global warming reductions and inclusion of bio LPG among others.

He maintained  that although there is a myth that cooking with fire wood churns out more nutritious meals than cooking with gas, most of such comparison remained in the mind as there are now seasoning variants that make meals taste the same.

“Sahara, through its subsidiary, WAGL Energy Limited is already working towards investing $1 billion to ramp up its LPG fleet and terminal infrastructure over the next five years. In addition to the vessel fleet, Sahara is in the process of building over 120,000 metric tonnes of LPG storage in 11 countries,” he said.

According to him, the countries earmarked for the storage tanks include Nigeria, Senegal, Ghana, Cote d’Ivoire, Tanzania and Zambia, disclosing that the processes for the project have commenced with five others in the preliminary stage.

Sahara, he said, has continued to lead efforts geared towards seamless energy transition in Africa through innovative energy solutions via its upstream, midstream, downstream power businesses, including partnerships with the United Nations Development Programme and other leading organisations.

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