A virtual expansion for Nigeria’s pipeline systemNovember 19, 2021
Olusegun Ogunwumi, COO of Gasco Marine (GML), talks to The Energy Year about the company’s virtual pipeline system and its plans for expansion and diversification. GML, a subsidiary of Viathan Group, is an indigenous company specialising in the distribution, compression and utilisation of natural gas in Nigeria.
What gaps in the gas value chain does Gasco Marine aim to fill?
It’s about time gas started playing the role it should. Nigeria has huge reserves of gas and our gas production is considerable. By contrast, however, domestic distribution of gas is poor and we’ve relied mostly on the importation of liquid products, which has become unsustainable. However, there are challenges facing the utilisation of gas in this country and infrastructure is the main one. This is where private companies like ours come in.
Gasco Marine has established a virtual-pipeline network via a fleet of trucks, which in effect extends the physical pipeline, conveying gas to end-users from wherever that pipeline stops. Through our fleet of CNG trucks we are able to improve gas penetration in Nigeria. Moreover, we recently commissioned a CNG mother station in Abeokuta, Ogun State, which is able to cater for industries in the region. Potential demand exceeds what we currently supply and CNG is needed in remote areas which pipelines don’t reach. So this is a great opportunity for us to lead. Once consumers know that gas is available, demand will pick up.
What is the significance of your mother station for supplying CNG across the region?
We commissioned our CNG mother station in July 2019. The facility has a total installed capacity of 216,000 cubic metres per day and is currently capable of processing up to 120,000 cubic metres of gas. We will be able to process over 50% more gas in a few months, with the total reaching 190,000 cubic metres.
The total value of this venture is approximately NGN 1.6 billion [USD 3.89 million] and it is a major milestone for the company. From it, our fleet can supply 105,000 cubic metres of CNG per day and can cover a radius of 250 kilometres from Abeokuta, reaching Oyo, Osun, Ondo, Ekiti and Lagos states.
Our distribution network is serviced via skids and Tube Cascade trucks. We currently have 15 skids of two different capacities – 8,000 cubic metres and 6,000 cubic metres. We are now adding two 8,000-cubic-metre skids and another four will be added by the end of this year. That will allow us to increase our virtual pipeline delivery capacity to almost 160,000 cubic metres.
We have a 20-year long-term gas purchase agreement secured with NGMC [Nigerian Gas Marketing Company]. On the other hand, we supply a wide spectrum of clients, ranging from governmental organisations through to private companies with power plants, to industries. We also supply the power generation facilities of our parent company, Viathan Engineering Limited.
What future plans do you have and what added value do you bring?
We are looking at other opportunities for setting up mother stations. Our mission is to take gas to as many people as possible. We are looking at where other facilities should be located so that we can supply other markets: in one or two years we aim to have one or two more mother stations. There are already quite a number of CNG stations in the southwest, but we are currently looking at other parts of the country which are not well served by gas, and it is here where we want to fill the demand gaps.
The fact that we are mobile, very adept and able to move fast gives us an advantage over our competitors. We understand CNG and comprehend the current needs of the market.
What positive prospects do you see for CNG given the recent changes in industry?
CNG has great prospects and there is plenty of potential in the industrial sector. There are a number of new clusters that are stranded in terms of gas supply and those are areas we would like to fix. We also know that the government is promoting autogas, so we also see that as a potential new area for the CNG industry.
On this note, we have already started to look at opportunities to convert buses to run on gas. We are also talking to major logistics companies in the country to see if, instead of conversions, they would be interested in purchasing new gas-fuelled vehicles. We have just signed a contract with a logistics company called Ecologique that has brought in 50 vehicles which run completely on CNG – we will supply the CNG needed by those trucks. This particular area will grow rapidly as CNG guarantees savings of up to 50% when compared to the cost of diesel. Not only this: maintenance costs are lower for gas-fired vehicles and their engines have a longer lifetime – not to mention their lower CO2 emissions and smaller environmental impact. Vehicles will thus be a crucial sector for us to supply in a few years.
Interestingly enough, the government is now thinking of deregulating, reducing or eliminating subsidies on PMS [premium motor spirit], which could make gas prices competitive. The PIB [Petroleum Industry Bill] is expected to provide additional incentives for increased utilisation of gas. However, conversion costs and simply getting people used to gas remain challenges and are barriers the government has to overcome.
Are you looking into mini-LNG and micro-LNG?
LNG is becoming a competitive alternative to CNG. With LNG you can go further and, in a country as vast as Nigeria, reach is essential. Remote areas are still difficult to access and service through virtual pipelines. In any case, both LNG and CNG are price-competitive with liquid products, especially LNG, which is now cheaper than AGO [automotive gas oil].
Despite starting as a CNG company, we are looking at opportunities to go into the LNG market, as well as opportunities to go into pipeline distribution – pipeline supply for industries and companies. In this area, our medium-term strategy will be to piggyback on existing and planned pipeline infrastructure such as the AKK pipeline and extend or reticulate to other companies and industries across the country.