Operators support local pricing template for LPG in Nigeria, West Africa

LIQUEFIED PE TROLEUM GAS (LPG) operators in Nigeria have thrown their weight behind the idea to establish a local pricing index for LPG to reflect the current realities in the value chain.

This initiative is coming even as stakeholders confirmed that Argus Media Limited, an independent provider of price information and business intelligence for the global petroleum and other commodity markets, was in the process of developing a West African price index for LPG.

Addressing options available to cushion the impact of foreign exchange volatility on the pricing of LPG in Nigeria at the Nigeria LPG Assembly webinar organised by the Oil Trading and Logistics (OTL) Africa downstream expo during the week, Dayo Adeshina, programme manager, National

LPG Expansion Programme said that it had become increasingly clear that Nigeria needed a pricing index that was not US based.

He said “Today, Nigeria operates an LPG pricing index that is US based because the Nigeria Liquefied Natural Gas (NLNG), whose market was predominantly US Mont Belvieu, was set up solely for export, but circumstances made it come into the domestic market and so they decided to use the same pricing index minus the freight rate from Bonny to Lagos.”

Adeshina noted that this was not the best pricing index especially for a country with frequent swings in the value of the naira. He stressed that issues around pricing could be addressed by significantly reducing exports and increasing inland production and competition among other producers as well as marginal field operators in the long run.