As the Nigerian government champions Compressed Natural Gas (CNG) as a cheaper alternative to petrol, Austin Avuru, founder of AA Holdings and former Seplat Energy CEO, delivers a reality check: “CNG isn’t cheaper—it’s cleaner. But Nigeria’s bad roads and broken logistics will eat your profits alive.”
In an exclusive interview with Africa Oil & Gas Report, Avuru—whose Platform Petroleum supplies 3 million standard cubic feet per day (MMscf/d) of CNG—exposed the gap between political rhetoric and on-the-ground economics.
The Myth of Cheap CNG
While federal officials project CNG demand could hit 600MMscf/d, Avuru dismisses the numbers as “theoretical.” His math is stark:
– Wellhead price: $2.30/MMscf
– Consumer price: $7/MMscf
– Reality check: “80% of that $4.70 margin goes into logistics. You think it’s cheaper than petrol? Run the numbers.”
Platform Petroleum, operator of the Egbaoma field, already feeds 3MMscf/d of CNG to Power Gas, a distributor near its Delta State facility. But Avuru warns that scaling this model nationally is fraught. “Imagine trucking CNG tubes from Umutu to Agbara on roads that haven’t seen maintenance in 30 years. The wear-and-tear alone cripples profitability.”
Platform’s Quiet Dominance
Despite his skepticism, Avuru’s Platform Petroleum is doubling down on gas:
– 30MMscf/d total production: 27MMscf/d flows into the OB3 pipeline for power plants, while 3MMscf/d fuels CNG.
– Expansion plans: Building a proprietary CNG station by 2025.
– LPG edge: 50 tons/day of liquefied petroleum gas (LPG) and propane, sold domestically.
“We’re ready to bump CNG supply to 30MMscf/d overnight if infrastructure improves,” Avuru said. “But until then, we’ll focus on industries and households—not chasing car owners.”
Why Politicians Love CNG
The government’s CNG push, framed as a response to petrol subsidy removal, ignores systemic flaws, Avuru argues. “Foreigners adopt CNG for emissions, not cost. Here, we’re gaslighting citizens into believing it’s a magic bullet. It’s not.”
He cites Platform’s midstream ventures as proof gas can work—with patience. Its Newcross JV-owned PNG business, revived from near-collapse, now turns profits by supplying LPG to factories and homes.
Investor Takeaway
For Avuru, Nigeria’s gas future hinges on:
1. Infrastructure: Fix roads, pipelines, and storage.
2. Targeted demand: Prioritize industries over mass vehicular use.
3. Realistic pricing: “$7/MMscf CNG won’t save drivers money if petrol stays subsidized.”
“We’re leading Nigeria’s CNG market quietly,” Avuru concluded. “But until logistics improve, the hype will outpace reality.”
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Why It Matters:
Nigeria’s gas ambitions risk stalling without honest dialogue about infrastructure. Avuru’s blend of critique and action offers a roadmap: leverage existing midstream players, target industries first, and fix logistics—not just prices.
