Iran war triggers cooking gas supply crunch, Nigeria hit

The Iran war has created a cooking gas supply shortage in sub-Saharan Africa, particularly impacting Nigeria, which is the region's largest LPG consumer. According to the latest report by energy intelligence provider Argus, demand for LPG in Nigeria dropped by nearly 23 percent in June, reaching a seven-month low of 123,000 tonnes.

This decline was primarily due to import constraints and reduced domestic production. Domestic production fell by more than 20 percent due to lower output from inland gas processing plants and maintenance at Dangote refinery's 218,000 barrels-per-day residual fluid catalytic cracker. In response to the supply shortfall, Nigerian LPG operators increased imports, which surged to a six-month high of 46,000 tonnes in June, up from 3,000 tonnes in May and zero imports in April.

The situation improved slightly after international LPG prices dropped following the US-Iran peace deal in June and reduced competition from Asian buyers. The Argus butane West Africa index fell by more than 40 percent to $513.50 per tonne in June, helping Nigeria achieve a 30,000-tonne surplus in July. However, supplies from Dangote refinery and gas processing plants rebounded, allowing Nigeria to cut imports as hostilities resumed between the US and Iran, causing international LPG prices to rise again.

Meanwhile, Ghana also faced tighter LPG supplies, with seaborne imports falling by almost a third year-on-year to about 24,000 tonnes per month between April and August. Higher domestic production from new refineries, such as the 40,000 barrels-per-day Sentuo refinery, helped mitigate the impact. Despite the challenges, both Nigeria and Ghana have seen growth in LPG consumption, with Ghana's LPG consumption rising by almost 11 percent year-on-year in the second quarter.