Oil & Gas
Focus on optimal ultilisation of domestic gas in West Africa
by KELECHI EWUZIE
November 15, 2017 | 12:28 am| | | Start Conversation
There is no gain saying the fact that West Africa region holds a relative abundance of natural resources, but only limited economic development to date. The region has been a large producer and exporter of crude oil in the past, and it appears that petroleum exploration and production activity will continue to remain high in the foreseeable future.
Reports indicate that while the region has considerable potential for the recovery and utilization of natural gas and LPG in energy applications in West Africa, significant progress in development of these important resources is a relatively new phenomenon.
LPG production in West Africa is expected to rise dramatically and this will provide an important resource which could be used to increase the quality of life in the region and retard deforestation.
Analysts stated that LPG markets in most countries in West Africa are in the early stages of development, and consumption rates have not reached high levels by international standards. However, West African LPG demand has expanded fairly significantly and it appears that regional LPG demand might be poised for a period of rapid expansion in the future.
A cursory look at the figures indicates that LPG production has been accelerating particularly fast in Nigeria. LPG production in Nigeria stands at an estimation of over 1.6 million tonnes per year and represents around 85 percent of the total LPG supply in West Africa.
LPG demand increased fairly well in Ghana in recent time, but the market expansion has since slowed. In Côte d’Ivoire, market growth has been stronger due to the positive effects of the CFA devaluation on the local economy and the positive impact of aggressive marketing practices of a new entrant on domestic consumption.
According to analysts, there is apparent impact that a new market entrant has had on the local market. While this new entrant has been successful in garnishing market share away from other marketers, total LPG consumption in Cameroon has not changed appreciably over the past decade, and most other marketers do not appear to have much interest in making additional investments in LPG distribution and marketing until the industry is reformed.
The highest growth market of these countries is Senegal. This is an important example of LPG market development in the region, and lessons learned in Senegal might be successfully applied in other countries in the region.
The government programme to subsidize LPG in small bottles has made it more affordable to lower-income customers and accelerated the rate of new customer additions during the 1990s.
A report by World Bank indicates that these types of investments according to industry close watchers were essential for an orderly expansion of the market. The strong growth pattern that became evident in Senegal during the early 1990s had the effect of drawing new participants into the market, who adopted aggressive marketing strategies and have helped to stimulate further growth in an already successful and expanding market.
The limiting factor on import parcel size in West Africa appears to be the capacity of the storage facilities in the various countries. Currently, most countries in West Africa import LPG on a ‘single port discharge’ basis.
Industry watchers opine that as the markets expand and the involvement of private companies in supply acquisition increases, more opportunities for supply optimization will likely develop.
The overall size of the local market served by import facilities drives the economical through put of the storage facilities.
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