Lagos — The Nigerian government is working on a long-term plan to replace the use of refined oil products with LPG in a bid to further reduced fuel imports, which have become a drain on the country's dwindling foreign exchange earnings, Oil Minister Emmanuel Kachikwu said Friday.
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Speaking in a webcast, Kachikwu said that while the government has been able to stabilize fuel supplies after it cut the subsidy on imported gasoline in May 2016 that allowed marketers to sell on the domestic market at a capped price of Naira 145/liter, the country's downstream oil sector still faced numerous challenges.
"We need to move away from white products to LPG...which is the byproduct of the gas that we have an abundance of," said Kachikwu.
"So we need to begin to look long term and how we build pipelines for LPG, so we can take LPG to the closest points for cars to reduce [gasoline] consumption."
Nigeria has the world's ninth largest proven gas reserves, at 187 Tcf, but a lack of key infrastructure means the bulk of the 8.0 Bscf/d of gas currently produced -- estimated at 3.5 Bscf/d -- is exported while the remainder is either utilized in oil fields or flared.
Nigeria sets aside 450,000 b/d of its share of the crude produced jointly with foreign oil partners, but government officials and the country's oil industry auditors NEITI have previously called for the scrapping of the allocation and the government to export the volume to raise revenue.
The four state-owned oil refineries, with a combined nameplate capacity of 445,000 b/d, have never been able to run consistently to provide the country with enough products.
According to Kachikwu, over the next few months, government agencies, including Nigerian National Petroleum Corp. and state fuel pricing regulator PPPRA will work together with private marketing companies and oil unions to develop programs for the switch to gas.
However, despite partially deregulating the domestic pump price of gasoline and Nigeria's central bank allowing the local currency to float freely to increase the availability of dollars on the Nigerian currency market, private marketers faced a shortage of foreign exchange to import fuel.
Nigeria has previously said it planned to reduce fuel imports, currently estimated at 1 million mt/month, by 60% in 2018 and end imports by 2019.
Kachikwu said Nigerian daily domestic fuel consumption had already dropped from 50 million liters a year ago to 37 million liters now.
--Edited by Jonathan Fox, email@example.com