Grand plans for gas in NigeriaApril 2, 2020
Chibuike Achigbu, CEO of Chimons Gas, talks to The Energy Year about the growth of Nigeria’s LPG market and what the company is doing to promote the commodity’s use. Chimons Gas sells and distributes LPG to the Nigerian market through distribution outlets and bottling plants.
How has the footprint of LPG expanded in Nigeria?
When we started in 1994, we wanted to build an LPG plant. We realised that the market preferred firewood and kerosene to LPG, but we continued to push for people to have better cooking fuels. We attended many courses from the World Bank and got involved in lots of advocacy where we distributed documents to show that using firewood to cook is not good for one’s health.
It took a long time before the industry accepted this. In some houses, landlords would not allow the use of a gas stove. There was fear, but at the same time firewood was causing deforestation. We gradually built up the statistics that we have today.
The market has improved. We had national consumption of 40,000 tonnes of LPG per year when we started, and we have raised consumption to about 900,000 tonnes per year as at 2019. This figure is still small compared to the size of the country, but there has been significant growth.
Can you describe your planned LPG terminal?
We decided to develop our own terminal, as LPG is seeing a lot of growth. Our future terminal will have a storage capacity of 11,000 cubic metres [388,000 cubic feet]. We are looking to distribute 160,000 tonnes of LPG yearly. Construction will commence in Q2 2020, and it is expected to be operational within 18 months.
It was difficult to attract funding from banks because of the balance sheet. We approached NCDMB [Nigerian Content Development and Monitoring Board] and they saw that our business would greatly impact many Nigerians. They have helped to provide equity and debt finance.
What is your strategy for distributing LPG?
We want to do as much as we can to saturate the local market. From there, we will begin to look at export. Some marginal field producers are now processing their wet gas to produce natural gas liquids while the dry gas is pushed to power turbines. This is the beginning of what we call stripping, where you process gas and extract the liquid LPG for cooking and other uses.
We are also working on our own to build one or two gas hubs in order to produce LPG to support the industry. We are distributing LPG in the local market, and the terminal in the Niger Delta will be our main hub. In terms of our distribution network, we are planning to add 15 new trucks before the end of 2020, which will up our fleet to 25. We are also investing in new LPG bottling plants. We have 10 but want to reach 50 before the end of 2025.
What is your strategy for your gas-related EPC business segment?
We have three different LPG terminals that we are developing for third parties. Discussions are advancing well. In terms of EPC opportunities, we are looking beyond LPG. Natural gas processing plants and gas pipelines will define the future of Nigeria.
We see a lot of opportunities in the wider gas space. Nigeria is sitting on gas, but we are not doing a lot to take gas from where it is and make it a marketable product. Nigeria has been producing 2.5 million bopd of crude oil. It is time we move into the gas space.
Where do you see Chimons Gas in the future?
We are already well known in the industry for LPG. However, we have moved beyond LPG into everything encompassing gas. I want to have a good brand. We want to grow our Nigerian company within the African space and then internationally.
A lot of African countries require the type of works we are doing in Nigeria. There are many opportunities within the African market in West, Central and East Africa. We want to begin to fill those gaps, but we will require funding to proceed at the pace we desire.