I thought this newsletter was about oil & gas and energy?
Feyi Fawehinmi
143

Lol Oga Feyi don vex o!

For completeness though, when it comes to fertilizer production, natural gas (and I’m assuming that’s what we are all calling gas here) isn’t just a fuel for powering the plants, it is a major input that is converted to urea first and then some form of ammonia and blablabla till you get fertilizer at the other end. In fact its advantages as a feedstock so far outstrips other options that according to some sources a full 95% of the world’s urea production is natural gas.

When the news first broke, the first thing that came to my mind was, “are these guys able to compete primarily because our gas pricing is so low?” Any time a Nigerian company finds something to sell to the world we need to dig in quickly and see if we can find a way to scale it. After all export diversification is the name of the game. So when I came upon this newsletter and the suggestion that the cheap (subsidized?) input was the source of the competitiveness I noted that down.

So then that brings all sort of new questions into play.

  • Why are the fertilizer companies (still) paying just a fraction of what others pay for the same resource?
  • What were the agreements viz export vs. local supply when the concessions were granted?
  • Have they been upheld? (If not please slam them with a fine)
  • Are the agreements time-bound? Should we be reviewing them now?

I understand that there are cases where a temporary arrangement can be used to stimulate a good thing. Obviously it’s the concessionary rate for the natural gas that’s making Chief Ogbeh blow hot air. This matter requires more than just noise though, I hope they’re actually looking into it with the level of detail it requires.

I don’t care if Nigerians want to eat all-organic food with no fertilizers (meaning zero local demand); if there is someone somewhere parting with their dollars for Nigeria-made fertilizer, we should be looking at ways to sell them more. I’m convinced with the value-add trapped in Nigeria, this is probably more profitable than exporting the gas raw or re-injecting it for enhanced oil recovery. So this market needs a proper structure especially since Dangote is going to enter the market as well with his combined refinery, petrochemicals and fertilizer project in Lekki. Now is the time to start getting the details right.

Note: interesting report for data lovers here — World Fertilizer Trends and Outlook to 2018