Construction of a Liquefied Petroleum

Gas (LPG) Plant

July, 2020
 Construction of a Liquefied Petroleum Gas (LPG)
Content

Contents:

Introduction
LPG Market
Flow Diagram for LPG Production
LPG Production in Nigeria
Plant Capacity and Project Duration
Project Economics
Conclusion
 Construction of a Liquefied Petroleum Gas (LPG)
Introduction

• Liquefied Petroleum Gas (LPG), has a vast investment potential in the

domestic liquefied petroleum gas filling sub-sector of the Oil & Gas Industry in
Nigeria.
• A large proportion of the middle and upper socio-economic class of people
depend on gas for cooking purposes. So are industries, government
establishments, hotels, hospitals, restaurants, bakeries e.t.c
• With huge gas reserves of 185 trillion cubic feet and the Nigerian
government's strong commitment to developing the gas industry through the
Gas Master Plan, there are a lot of emerging opportunities for investors in the
sub- sector.
 Construction of a Liquefied Petroleum Gas (LPG)
LPG market in Nigeria

• The Nigerian LPG market is a fast-growing market. Nigerians consumed

600,000MTPA of LPG in 2018, through approximately 15,000 retailers, trading
1,500,000 units of LPG cylinders and serving 1.5 million households which
makes up just 5% of the total households in Nigeria.

• Nigeria’s consumption in 2008 was 80,000MTPA in 2008 and grew 650% to

600,000MTPA in 2018

• 47 per cent of the LPG supply in the country in the first quarter of 2019 was
imported while 53 per cent was produced locally.
 Construction of a Liquefied Petroleum Gas (LPG)
LPG market in Nigeria

• The Nigerian LPG (Cooking Gas) retail price structure is not regulated in any
way; prices are determined by market forces of demand, supply and the Mont
belvieu international pricing system. As the price of LPG moves in the
European and Western markets it also moves in the local market in Nigeria.
When the demand for LPG goes up during winter in Europe, prices increase in
Nigeria and when the demand drops in Europe during summer, prices drop
locally in Nigeria.

• The average retail price for a 12.5kg Cylinder in Nigeria in the first 6 months of
2019 is NGN4,000 , $ 11.09
Construction of a Liquefied Petroleum Gas (LPG)
Flow Diagram for LPG Production
 Construction of a Liquefied Petroleum Gas (LPG)
LPG Production in Nigeria

In Nigeria LPG is currently delivered to the local market principally through 3

sources:

• NLNG and other Processing Plants in Nigeria: The Nigerian LNG

(NLNG) is the largest gas processing facility in Nigeria. The company has
a mandate to provide 250,000MTPA to the local market, it is currently
being reviewed upwards to 500,000MTPA because of increased local
demand. Other major gas processing centres in the country are Mobil’s
Oso facility in Bonny and Chevron’s Escravos facility both of which
produce LPG chiefly for the export market.

• Local Refineries: The refineries in Warri and Port Harcourt produce LPG
as a light end product of the crude refining process. LPG gotten from the
refineries makes up less than 5% of the total LPG consumed in Nigeria.
LPG produced at the refineries are solely for domestic consumption.
 Construction of a Liquefied Petroleum Gas (LPG)
LPG Production in Nigeria

• LPG Imports: 47 per cent of the LPG supply in the country in the first
quarter of 2019 was imported while 53 per cent was produced locally.

• LPG is supplied to the bulk storage terminal through vessels, then

distributed through trucks to retail distribution plants ranging from small
plants of 2.5mt to 100mt across the nation from there it will be distributed
to small retailers who retail to end users
 Construction of a Liquefied Petroleum Gas (LPG)
Plant Capacity and Project Duration

• The project involves the Engineering, Procurement, Installation and

Construction of a 2,000MTPA LPG facility.

• The project is planned for completion in 2.5 yrs

• The Ready For Start up date for the facility is 30months from the date of
contract award.
 Construction of a Liquefied Petroleum Gas (LPG)
Project Economics

• The required startup capital estimate of the business is $3,680000. A

percentage of the capital can be raised from bank loans.

Project Cost Payback Period

$ 3,680,000.00 3
 Construction of a Liquefied Petroleum Gas (LPG)
Conclusion

• The LPG market in Nigeria will grow exponentially in the coming years .

Currently, Nigeria imports more than 40% of LPG consumed in country.

With government policies that encourage the use of gas for monetary

ventures and planned reduction of gas flaring, the economic and social

value of this project makes it attractive venture for investors.

Questions?

Thank you!