Dangote, NNPC, others sign deal on supply of 70 million cubic of natural gas

The Dangote Group, the Nigerian National Petroleum Company (NNPC) Limited, Shell, Nigerian Agip Oil Company (NAOC) Limited, Total Energies as well as the Gas Aggregation Company of Nigeria (GACN) have signed a Gas Sale and Aggregation Agreement (GSAA) in Abuja.

The agreement  took place on the sidelines of the ongoing Nigeria International Energy Summit (NIES),

According to This Day, it would see the companies supply 70 million standard cubic feet per day of natural gas to Dangote Fertiliser Limited (DFL) to ramp up operations at the plant.

Natural gas is a feedstock of the Dangote Fertiliser plant, with the gas supply agreement expected to guarantee the availability of the major raw material needed to run the plant.

The deal coincided with a statement by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), releasing a new Domestic Gas Demand Requirement (DGDR) for 2022, and pegging the figure at 4.4 billion standard cubic feet for the country.

Nigeria represents one of Africa’s heavyweights when it comes to hydrocarbon exploration and production, with over 206 trillion cubic feet of natural gas, but has a huge gas supply deficit despite rising demand.

The African Energy Chamber (AEC) recently put Nigeria’s annual production capacity of gas at 1.450 billion cubic feet, as the country recovers from 2020 low production levels due to COVID-19.

But despite boasting of huge reserves and topping major countries, Nigeria’s per capita consumption of gas, Nigeria’s Ministers of State for Petroleum Resources, Timipre Sylva, recently lamented, remains one of the lowest in sub-Saharan Africa.

But speaking during the contract-signing event which was witnessed by the chief executives of all the organisations, the Founder of the Dangote Group and Africa’s richest person, Alhaji Aliko Dangote, said the deal would save the country a whopping $1.8 billion in foreign exchange.

Dangote stated that aside Egypt, Nigeria was the topmost fertiliser producer in Africa, explaining that the Dangote plant, Notore and the one belonging to Indorama have a huge combined production capacity on the continent.

The business magnate explained that aside meeting the domestic demand for fertiliser, the Dangote group was working hard to ensure that Nigeria retains a large chunk of its foreign exchange.

“I want to thank the Group Managing Director (Mallam Mele Kyari) for his leadership. Without him, this wouldn’t have happened. I also want to commend Shell, and most of all Bala Wunti (Group General Manager, National Petroleum Investment Management Services (NAPIMS) for pushing and making sure this becomes a reality.

“This additional gas will help bring in more foreign exchange into the country, especially with the current energy crisis. With our fertiliser plant, Notore, and Indorama, we are second in Africa. Apart from Egypt, no other African country has our capacity.

“We will meet domestic market and also export and we are talking about $1.8 billion (savings) in terms of foreign exchange coming into the country,” he stated.

Kyari said the contract was perfected within a short period based on its importance to the production of fertaliser and agro-economic growth of Nigeria.

“As you are aware, Dangote fertiliser is one of the biggest producers of fertiliser and this deal, which is to offer 70m scuf per day to Dangote fertiliser by the JV, will contribute to the surge of fertaliser production in Nigeria. Of course, it will tremendously be positive to our agro-economy,” Kyari said.

Also speaking, Managing Director of the Shell Petroleum Development Company and Country Chair, Shell Companies in Nigeria, Mr. Osagie Okunbor, described the agreement as the fastest GSAA ever in the country.

He commended the partners for working under serious pressure to ensure that the deal was struck, noting that it remains hugely important for the country.

He explained that the current government takes agricultural production very seriously, noting that as the company which produces the bulk of Nigeria’s fertilisers, the Dangote group was well positioned for the deal.

Meanwhile, a statement earlier signed by the NMDPRA Chief Executive, Mr Farouk Ahmed, noted that the newly released national gas requirement was jointly determined by all the relevant stakeholders.

He stressed that the data was transmitted to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) on Tuesday, with the power sector need pegged at 2.324 billion standard cubic feet per day.

“In addition, the gas-based industries were fixed at 1.125 billion standard cubic feet per day and the commercial sector was set at 1.034 billion standard cubic feet per day while the total domestic gas demand requirement was 4.482 billion standard cubic feet per day,” he stated.

He noted that the document would help the NUPRC to prescribe and allocate the domestic gas delivery obligation among all lessees as stipulated in the Petroleum Industry Act (PIA) 2021.

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