A Nigerian LPG player eyes the upstream

Nigeria

Chibuike Achigbu, managing director of Chimons Gas, talks to The Energy Year about the company’s plans to become a fullstream player and the ongoing challenges faced by the Nigerian energy industry. Chimons Gas sells and distributes LPG to the Nigerian market through distribution outlets and bottling plants.

What are Chimons Gas’ main services?
Chimons Gas Limited is a privately owned energy company operating in both the upstream and downstream sectors in Nigeria. Our penchant for exceeding customer expectations in our service delivery has enabled us to build a reputation as a world-class organisation dedicated to promoting excellent service delivery to all of our clients.
As one of the major LPG offtakers with NLNG, our business focus is the supply and distribution of petroleum products nationwide. We have distribution outlets as well as gas bottling plants in Nigeria and are affiliated with dealers all over the world with deep market penetration and LPG terminals.

How is Chimons Gas expanding its footprint in Nigeria?
Nigeria still imports 40-50% of the gas it uses domestically while sitting on some of the largest gas reserves globally. Infrastructure-wise, we only have six terminals but thousands of gas refilling plants. The government needs to show proactive behaviour in exploiting these reserves. Imo State has the largest gas deposits in Nigeria, and the local authorities are not proceeding accordingly.
We are planning to enter the upstream sector. Chimons Gas has historically been a downstream and midstream company dependent on external gas supplies. We want to become self-reliant by becoming a fullstream player. The plan is to enter into a partnership with Imo State to develop their abundant gas reserves. We are going through the documentation process, which takes quite some time. We plan to operate with liquid gas to work with LPG and gas-to-power. If the collaboration with Imo State is not successful, we will look for other partners.
NPDC is a valid candidate because they have considerable gas reserves that need to be processed. Regarding distribution, we plan to build 25 additional gas stations. Through our partnership with NLNG, we have a shared storage facility where we rent depots for our products.
Nonetheless, we have decided to expand our footprint by building a 5,000-tonne LPG terminal in Koko, Delta State. It should be operational by May 2023. We contracted a Belgian company for this, while the tanks are from Italy. We have recently signed an MoU with host communities. We are providing them with packages, infrastructure and scholarships for the youth. We have hired 21 people for the construction phase.

How is Chimons Gas funding its expansion plan?
A good business attracts good investors, either in cash or in equipment. We plan to deal with public entities since the ROI is safer with them. We plan to start with a small-scale investment because it is easier to manage, and we are already in touch with some investors in the USA. Once we get the equipment, it will be easier to access cash funds.
Our potential partners will lease us the equipment while giving us the chance to pay over an extended period of time. Meanwhile, banks can come in for the remaining cashflow. Regarding the gas terminal, we have already raised funds thanks to some equity investors.

What are the main challenges faced by the Nigerian energy industry?
Challenges associated with getting access to funds are still considerable in Nigeria. We are missing a collaborative and fostering environment where public and private stakeholders are encouraged to invest. The government should prioritise this by joining together to create wealth for every player in the industry. The Nigerian Gas Flare Commercialization Programme is a pioneering project in this regard. The flared gas can be converted into usable products by creating an additional gas value chain.

Where do you see Chimons gas in the next two years?
In the next two years, our expansion plan will be fully delivered. We also plan to list on the stock market. We are currently doing an in-depth study to select possible investment destinations in West Africa. The plan is to move to a country with a high demand for gas and import it there. Once our upstream projects are onstream, we will be able to import them. Once we select a feasible destination, we will proceed by building a depot there where we will store our products.

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