Elisha Bala-Gbogbo Lagos
Oando, a Nigerian energy company, is building a business to truck natural gas to industrial users whenever they are cut off from pipeline supply, an executive said.
“We’re basically creating a market for the future,” Bolaji Osunsanya, chief executive of Oando Gas & Power, said on May 19 in Lagos. “Markets that otherwise you won’t have been able to use pipelines to serve, today it is possible to truck compressed natural gas there.”
Oando is investing $36 million (R429m) to build three gas compression plants in the country’s southern industrial belt within a year to produce 20m cubic feet of gas a day initially, and then increase capacity as demand rises, he said.
Though Nigeria, Africa’s biggest oil producer, also has the continent’s largest gas reserves of more than 184 trillion cubic feet, it lacks the pipeline network to reach most potential users.
Existing pipelines passing through the restive Niger River delta are frequently sabotaged, causing supply disruptions. Average daily output of gas in Nigeria is about 9 billion cubic feet, according to the state-owned Nigerian National Petroleum Corporation, or NNPC.
With domestic gas demand projected by the NNPC to reach 5 billion cubic feet daily in the next two years, Oando is targeting “big energy users” such as cement and steel plants, who currently rely on diesel to generate at least 1.5 megawatts of power per factory, to switch to gas, Osunsanya said.
Natural gas traded $2.833 per million British thermal units on the New York Mercantile late morning in London.
Compressed to become more than 200 times smaller than its original volume, gas could be delivered to companies connected to pipelines during supply disruptions, Osunsanya said.
The plants are to be located in the southeastern industrial town of Aba, the oil hub of Port Harcourt and a third to be located in central Nigeria.
Oando concluded a $1.65bn acquisition of ConocoPhillip’s Nigerian oil and gas assets in June. Its gas and power unit operates a 228km pipeline that supplies industrial users in Lagos, as well as Port Harcourt.
“The technology can be utilised on all modes of transportation,” Osunsanya said.
“Today it’s trucks, but there’s a future for rail and for barges, so we can wheel compressed natural gas through the rivers upstream.”
Oando’s shares fell 1 percent to 18 naira each as of late morning trading in Lagos yesterday. – Bloomberg