Gas Aggregation Company Nigeria Limited (GACN), on Wednesday, facilitated the signing of a Gas Sale and Aggregation Agreement (GSAA) for the supply of natural gas by the joint venture comprising the Nigerian National Petroleum Corporation (NNPC), Shell Petroleum Development Company of Nigeria (SPDC), TotalEnergies EP Nigeria Limited (Total), and Nigerian Agip Oil Company Limited (NAOC) to Dangote Fertiliser Limited (DFL). The GSAA, which also has GACN as a party, is another milestone in the aggregator’s efforts aimed at increasing natural gas utilization in the Nigerian domestic market.
DFL’s fertilizer plant at Ibeju Lekki, Lagos State, is a flagship mega fertilizer project intended to support the Federal Government’s drive to grow the agricultural sector and in turn improve the Nigerian economy.
The GSAA, once operationalized, will see DFL supplied with up to 70 million standard cubic feet per day of natural gas to ramp up operations of the fertilizer plant and save Nigeria roughly USD 1.8 billion in foreign exchange.
Natural gas is an essential feedstock used in the production of fertilizers. The GSAA is expected to ensure the accessibility of natural gas to fulfill this purpose.
The signing of the agreement coincided with the ongoing fifth Nigeria International Energy Summit (NIES 2022) with the theme “Revitalising the Industry: Future Fuels and Energy Transition”; and the release of a Domestic Gas Demand Requirement of 4.4 billion standard cubic feet by the Nigerian Midstream and Downstream Petroleum Regulatory Authority.
With over 206 trillion cubic feet of natural gas, Nigeria is considered one of Africa’s largest in hydrocarbon exploration and production. Despite these huge gas reserves, the exploitation of this natural resource remains very low despite rising demand.
During the signing ceremony, the President of Dangote Group, Alhaji Aliko Dangote described the signing of the agreement as an important milestone, noting that the additional gas supply to the fertilizer project would save Nigeria as high as about $1.8 billion in foreign exchange in light of the ongoing energy crisis. He added that save for Egypt, Nigeria has an unparalleled capacity to become the topmost fertilizer producer in Africa.
Mele Kyari, Group Managing Director of NNPC mentioned that the contract having been concluded in a relatively short period signals the importance of natural gas to the production of fertilizer and by extension, the agro-economic growth of Nigeria.
“As you are aware, Dangote Fertilizer is one of the biggest producers of fertilizer and this deal, which is to offer 70mmscf per day to Dangote Fertilizer by the JV, will contribute to the surge of fertilizer production in Nigeria. Of course, it will tremendously be positive to our agro-economy,” Kyari said.
“But more importantly, it is a platform that will increase local production of fertilizer in our country.
“As you may be aware, it is government’s drive to ensure that we become self-sufficient in the production of fertilizer in the country, and specifically for this year’s zero import of fertilization in the country.
“Currently, Dangote group provides about 65 percent of all domestic production of fertilizer. And we are happy to sign the Gas Supply Agreement with them,” Kyari added.
Osagie Okunbor, Managing Director of SPDC and Country Chair echoed this, commending the fellow signatories to the contract for their hard work and noting its importance to the development of Nigeria.
The Managing director of GACN, Mr. Olalekan Ogunleye also signed the agreement on behalf of GACN.
