Producers shift away from diesel in favor of gasoline amid skyrocketing energy expenses

Manufacturing firms across Nigeria are increasingly adopting natural gas as a more viable option, driven by the escalating costs of diesel and the subsequent strain on production costs and profitability in the industrial sector.

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Industry stakeholders have emphasized the necessity of this shift, citing the pressing issues of high energy costs, unstable power supply, and foreign exchange pressures that have significantly worsened the operating environment for businesses.

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Idaere Gogo Ogan, Chairman of the Board of the Niger Delta Chambers of Commerce, Industry, Trade, Mines and Agriculture, noted that the effective utilization of gas could profoundly transform industrial operations and revive struggling businesses in the Niger Delta region.

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Speaking through the Board Secretary, Chief Solomon Edebiri, at a business and investment forum in Port Harcourt, Rivers State, Ogan expressed concern that over 500 companies in the Niger Delta had ceased operations in recent years due to harsh economic and operational conditions.

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Ogan stated that the effective utilization of gas can significantly reshape industrial practices and revive business activity in the region, highlighting the potential benefits of gas adoption.

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The forum, organized by Shell Nigeria Gas, brought together stakeholders from the energy and manufacturing sectors to explore ways of reducing operating costs and improving productivity through the adoption of gas.

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The growing trend towards gas-powered operations is occurring amidst sustained increases in diesel prices, partly driven by tensions in the Middle East and volatility in global energy markets.

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According to the environmental certification organization, Gold Standard, developing countries account for between 350 gigawatts and 500 gigawatts of diesel generator capacity, spread across an estimated 20 million to 30 million sites.

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Gold Standard noted that diesel-generated power is expensive, averaging about $0.30 per kilowatt-hour, and significantly higher in remote areas with poor electricity access, with annual global spending on generator fuel ranging between $30 billion and $50 billion.

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At the forum, Shell Nigeria Gas announced that two new industrial customers, Intercontinental Distillers Limited II and Rumbu Industries Limited, had been added to its gas distribution network in Agbara, Ogun State.

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This development increased the number of firms using Shell Nigeria Gas's gas solutions to over 150 across Abia, Bayelsa, Ogun, and Rivers states.

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Chukwuka Amos-Ejesi, Head of Gas Distribution at Shell Nigeria Gas, stated that manufacturers switching to gas were already benefiting from lower and more stable energy costs, reduced exposure to volatile fuel prices, and improved operational efficiency.

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According to Amos-Ejesi, firms adopting natural gas enjoy reduced exposure to liquid fuel price volatility, enhanced operational uptime, improved planning certainty, and a stronger competitive offering for their customers.

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Shell Nigeria Gas emphasized that natural gas offers both economic and environmental advantages over diesel, particularly as manufacturers continue to grapple with soaring energy costs and unreliable electricity supply.

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The company disclosed that gas supply to Intercontinental Distillers Limited II and Rumbu Industries Limited was equivalent to about four megawatts of electricity, expected to improve production efficiency and lower operating costs.

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Stakeholders at the forum included representatives from the Nigerian Midstream and Downstream Petroleum Regulatory Authority, Bank of Industry, Manufacturers Association of Nigeria, and the Port Harcourt Chamber of Commerce.