Ubani: Nigeria, Others Must De-risk Private Sector Investments in LPG to Enhance Supply, Consumption

Managing Director, WAGL Energy Limited, Mr. Emmanuel Ubani, in this interview provides insights into the current global campaign and efforts for a shift towards gas as a transition fuel, with suggestions on how developing economies like Nigeria can enhance Liquefied Petrolatum Gas penetration and consumption in the African continent. He also highlights among others, how WAGL is enhancing energy access in Africa through leadership and continuing investment in infrastructure, technology, and human capital. Peter Uzoho presents the excerpts:

Energy transition is gaining traction in Africa. What does the continent need to do to accelerate this and what are the critical areas of focus?

Simply put, any country that wants to be at the forefront of the energy transition across the continent will need to massively de-risk and promote more private sector investment. This is very critical. Governments need to do a great job at providing an enabling environment for the sector to thrive. They need to take advantage of the abundancy and competitiveness of renewables and also support systemic innovation, especially as it affects the changing energy mix.

What would you say have been the outstanding achievements of WAGL Energy Limited since inception?

Defining the outstanding achievements of a company could sometimes be very difficult especially when as a company, several note-worthy and remarkable milestones have been recorded within a short period of its existence. In our case, WAGL Energy Limited was formed about nine years ago as a Liquefied Petroleum Gas (LPG) trading outfit. In this short span, the company has metamorphosed into an integrated oil and gas company, playing in virtually all the value chain of the industry complementing as well as in other significant enabling sectors. Being specific, WAGL was not reckoned with the capabilities it currently exhibits from trading in LPG. The company now trades crude oil, Natural Gas Liquids (NGLs), that is: LPG and condensate, specialised products derivatives like Escravos gas-to- liquids (EGTL) Naptha, Diesel and most importantly, liquefied natural gas, which we most recently commenced lifting and trading. Concurrent to the above trading activities, WAGL is now playing a key role in the realization of the operations of the Oil Mining License (OML) 11, one of Nigeria’s finest oil and gas assets, under the Nigerian Petroleum Development Company (NPDC)’s portfolio. The deal sees WAGL bring in an investment of over $3.4 billion. This is a no mean achievement. Through the instrumentality of WAGL, Nigeria can now boast of an indigenous company with a growing fleet of LPG carriers. So far, four LPG vessels have been constructed. The company is successfully and safely operating the investment. As the Managing Director, these achievements are all regarded as outstanding as they all significantly contribute to the northbound bottom line of the company. 

Achieving environmental sustainability is critical to securing the future of the planet. How does the company contribute to the cause?

Oil and gas will remain a core part of the global energy mix for a while, which is why WAGL is very proactive and transparent about its sustainability strategies, whilst also identifying and securing new opportunities arising from the transition to a low carbon economy. This is highlighted in our focus on the gas market, which is classified as a type of clean energy offering environmental benefits over other fossil fuels.

How is gas performing as a transition fuel in the West African sub-region and how does WAGL intend to promote seamless access and stability in supply?

Transition fuel is now very topical and commands different interpretation by different organisations. To some, it is the complete replacement of fossil fuels with renewable energy sources, while to others, it is the attainment of a net-zero emission or carbon neutrality target. For us in Sub Saharan Africa, West Africa in particular, we believe that carbon neutrality should be the pathway to reducing the negative impact of fossil on the environment. This is why we see LPG as a potential transition fuel of choice in place of kerosene, firewood and coal, which are high carbon fossil fuels and contribute greatly to high CO2 emissions in the West Africa sub-region. In Nigeria, the Energy Transition Plan (ETP) defined a pathway to achieving net-zero target by 2060, and top of the strategy is switching to LPG. Across Africa, the drive is same, thus making LPG the notable transition fuel. Looking at statistics, Africa’s consumption of LPG is minor on the global scale. Over 850 million Africans still depend on solid fuels (biomass) for cooking. In West Africa, LPG has long been an aspirational fuel choice for many urban and rural poor, which still use kerosene and firewood for cooking. Sub-Saharan African growth was at almost nine per cent in 2020, with Nigeria leading the way with an estimated consumption of 780,000 tonnes per year, according to World Energy Consultants – News Report August 2020. According to figures from the Economic Community of West African States (ECOWAS), the four major countries of Nigeria, Ghana, Senegal and Ivory Coast account for more than 85 per cent of the total LPG consumed in the region. 

WAGL seeing opportunities in the energy transition space has embarked on developing infrastructure to take beneficial advantage. To this end, we have fully commissioned two handy sized carriers to ensure that supply to locations with lower drafts that hitherto pose LPG distribution challenges across West Africa are addressed. In addition to this, WAGL is looking into development and construction of jetties across West Africa. Discussions are already at advanced stages for the first in the lot. 

WAGL is a product of the NNPC-Sahara Group partnership. What has been driving the success of the partnership?

Sure, WAGL is the product of the NNPC – Sahara Group Partnership, a partnership that can be adjudged as very successful. At the formation stage of this partnership, there was apprehension and sceptism particularly on the possible outcome of the relationship. Upon reflection on the achievements and appraisal of the company’s performance to date, I would like to sincerely commend the ingenuity of the founding fathers. The driver of the success of this partnership is majorly the goodwill of the shareholders anchored on the acronym – REST: Mutual Respect, High level of Enthusiasm, Positive Deployment of Strength and Focused Tenacity. Whilst NNPC enabled the company to participate competitively with other players, Sahara Group brought on board the trading and marketing prowess. The combination of which empowered the growth of the company as a global market player. Another significant success driver is the resourcing of the best-in-class personnel. This has made the lean structure of WAGL to record high efficiency. 

How challenging is the sourcing of products for WAGL and how is the company addressing this?

Sourcing of products for WAGL operations has been immensely challenging. As you may be aware, our in-country supply sources has been struggling to maintain optimal production level due to vandalism of the pipelines outage. It is gratifying to note that conscious efforts are currently being deployed to arrest this anomaly. Hopefully, the hay days of increased productivity in the oil and gas sector will soon be restored and WAGL will tap in to take benefit as well. In the meantime, to augment the shortfall, WAGL sources its products, LPG and petroleum products’ cargoes from the US, Europe and Asia markets.  

The demand for LPG ln Africa is growing. What does the continent need to do to promote more usage in rural communities?

For LPG to increase to a significant or dominant market position in Sub-Saharan African countries, an enabling environment for the sector must be put in place. Elements that make up this environment include infrastructure, that is, both liquefaction and regasification plants, gas distribution, pipelines and/or gas distribution trucks, cylinder distribution and/or segmented local distribution to individual houses and industries. These make the alternative energy source (LPG) attractive and sustainable in the specific cultural and social setting they are promoted. All parts of the value chain must be in place and functional, and a distribution system to enable feasible access for the users must exist, that is, a ready and vibrant market network and most importantly, acceptable and accommodating uses of the alternative energy source. Ensuring this requires both public and private investments at a level that allows for economies of scale, supporting in making the sector commercially viable. Sufficient attention on policy and strategic level, with clear responsibility allocation and appropriate regulation of the sector, is required.

The governments across West Africa are working to put these in place. However, they would need companies like WAGL to accelerate this initiative. This brings to the fore, the need for clear matrix that would guarantee return on investment to encourage private sector participation.

What is the significance of the recent commissioning of two new LPG vessels for WAGL?

The LPG market in Nigeria is growing by approximately 10 per cent per year and requires additional shipping capacity to make LPG available, anytime, to end users. By the commissioning of these vessels, WAGL is not only strategically positioning itself but also acting as a catalyst for the growth of not just the Nigerian LPG market but the African energy market at large. The different range of WAGL’s LPG carriers put her in a vantage position to access different jetties, especially those with lower drafts which the new vessels can call at comfortably.

How much LPG volume has WAGL’s previous vessels MT Africa Gas and MT Sahara Gas supplied since they were commissioned in 2017?

MT Africa Gas & MT Sahara Gas have collectively delivered more than 6 million CBM of LPG in Africa since commissioning. The performance level is a direct response to the challenges of reduced in-country product availability mentioned earlier. WAGL’s growth trajectory aims at a minimum annual volume supply of 2 million CBM. We count on the support of our in-country supply sources: NNPC and NLNG to attain this growth strategy. 

One of the highlights of the event was the target of 10 vessels in 10 years. How does WAGL intend to achieve this?

The Nigerian Transition Energy Plan led to the declaration of the Decade of Gas (2021 – 2030) which targets boosting LPG consumption to about 5 million tonnes per year by 2025. Other West African countries have equally adopted similar strategy and adjusted their energy mix to upscale the footprint of LPG. To make this dream a reality, there is an urgent need for an increase in local LPG fleet. WAGL is championing this cause by its partnership with NNPC, and leveraging on its vast experience, access to financing and excellent working relationships with global tanker manufacturers. We are hopeful that given a fair business climate, our target of 10 vessels in 10 years will be realised. The target will be phased in delivery, with the first phase envisaging three vessels in four years and thereafter, increasing the fleet based on market assessment and commercial realities.

How much progress has WAGL made in the aspect of ramping up storage and infrastructure of gas in the sub-region?

One of the vessels that was just launched; MT SAPET Gas, was named after one of our parent company’s joint venture with Cote d’Ivoire’s state-owned Petroci. The venture, SAPET Energy SA., is building a 12,000 tonne LPG facility in Abidjan with a plan to increase capacity to 30,000 tonnes. 

In addition, WAGL’s parent company, Sahara, is in the process of constructing a 12,000MT LPG Storage facility in Apapa, Lagos. This will add to the already existing 1,000MT LPG Storage facility owned by Sahara, in Calabar.  

What is WAGL’s outlook for the next five years?

WAGL will be at the forefront of the global energy market over the next five years, as an energy provider of choice. This will happen as we broaden our tentacles across the energy value chain: downstream via the sales of domestic LPG, midstream via the shipment of all petroleum products and NGLs and also upstream via the provision of technical and financial services for acreages as well as securing licenses as they arise going forward. As we expand, we shall continue to develop smart goals and harness our skills as it relates to the energy transition.