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Shell fire incident raises fear of gas price hike

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There are palpable fears that the fire on Tuesday in Shell’s Gbaran facility in Bayelsa may raise the price of Liquefied Natural Gas in Nigeria.

This is against the backdrop of the surge in the price of Liquefied Petroleum gas in Africa’s largest oil producer.

On Tuesday, explosions and sightings of smoke erupted at Shell’s Gbaran facility, the most critical infrastructure in Nigeria’s LNG gas feedstock project, which processes almost 2 billion standard cubic feet of gas daily.

However, Shell assured that the incident would not prompt an immediate operational shutdown of the facility.

Meanwhile, on Tuesday, the company said it is taking steps to investigate the specifics of the incident and assess any potential impacts on its operations.

“We are actively monitoring reports of smoke detected near our Gbaran Central Processing Facility in Bayelsa State.

“While the source appears to be external to our facility, we are in close communication with regulatory authorities to look into the incident and ensure the safety of the surrounding communities,”it said.

Recall that in April, Engr Farouk Ahmed, the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), said the government raised the commercial wholesale gas price by 11 per cent from $2.50 per Metric Million British Thermal Unit to $2.92/MMBtu.

The implication is that electricity generation companies in other sectors driven by LNG now pay more to buy gas.

Still, the Liquified Petroleum Gas, a by-product of natural gas processing and crude oil refining Nigerians use for cooking, has also increased.

DAILY POST reports that the price of a 12.5-kilogram cylinder of Liquefied Petroleum Gas, also known as cooking gas, increased by 46.88 per cent yearly.

The price of LPG has remained high despite the federal government’s value-added tax waivers for product imports since last year.

Nigeria relies on LPG imports to meet its 50 per cent consumption.

Speaking on the development Barr Ameh Madaki, an Oil gas expert and Managing Partner of BBH Consult, said the Gbaran Shell’s facility is responsible for LNG to gencos in Nigeria and most of the product’s export.

He said the Nigerian government must ban the export of LNG and LPG to bring down the price of LPG.

“Nigeria can not export LNG, yet, it imports LPG. It is strange economics”, Madaki said.

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“If the government is serious about reducing the price of LPG, it should ban the export of LNG and LPG.

“LPG should be piped to Nigerians’ homes; it is better than the gas flaring in Nigeria”.

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