Current LPG Prices At The Depots Are Artificial And Not Sustainable.

By Oluwabukola Jimoh ــ Last Update 06 June 2024

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Current LPG prices at the Depots are Artificial and not sustainable.

News flying around about the impact of the intervention of the government that resulted in the reduction of cooking gas prices at the depot nationwide may not be true. If you missed our prior post, then click here to read for context.

Mobil BRT and Chevron located at Bonny Island and Escravos respectively still export significant volumes of LPG. The NLNG who is responsible for a significant portion of the local supplies in the market supplies the market at a cost higher than 16 million per 20MT. When you look at the factors that adds up to the landing cost of LPG at the depot , you will see that it is not possible for importers and NLNG off-takers to sell at 15.5 million per 20MT.

Let's look at the Factors:

Argus AFEI price plus Freight to Nigeria for NLNG

Mont Belvieu plus a higher freight (relative to Argus) into Nigeria.

Naira-USD Exchange rate at about 1500 Naira /USD

Port Charges which is about 10 to 30 USD/MT depending on local or Import

Related regulatory fees which is about 25,000 Naira /MT

Throughput cost which is about 25000 Naira /MT

Exceptions:

Only the following Gas processing plants can sell at the current rate on a sustainable basis:

1. NEPL Plant at Oredo, Edo State

2. Panocean at Ovade, Delta state

3. PNG at Umutu, Delta state

4. Greenville LNG, Rumuji, Rivers State

5. Kwale Hydrocarbon Limited at Kwale, Delta state.

What is happening in the market is a slowing down of the market as a result of the Economic situation, if prices persist at this rate, supply will reduce and prices will hit the roof.

The real issue is macro-economic - the buying power of the customers is reducing and offtake is slower than last year, for instance.

This is just to share the facts with our followers. To get more information about the market and position yourself for opportunities, kindly subscribe and join our verified list.

See the link to the news of the visit by the NALPGAM executives to the Minister of state for Gas .

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Oluwabukola Jimoh

Oluwabukola Jimoh is a dynamic academic writer and captivating energy blogger. She is able to delve into intricate subjects with an insatiable thirst for knowledge, crafting thought-provoking essays that engage and enlighten her readers.