The Nigerian National Petroleum Company Limited (NNPCL) has announced a significant milestone in its operations, as it begins shipping Liquefied Natural Gas (LNG) cargoes to major markets in Japan and China on a Delivered Ex-Ship (DES) basis. This development marks a strategic expansion of NNPCL’s presence in the global energy market and showcases its growing capabilities in LNG trading.
In a statement released on Monday, Olufemi Soneye, the company’s spokesperson, revealed that this achievement was made possible through the combined efforts of two of NNPCL’s downstream subsidiaries—NNPC LNG Ltd and NNPC Shipping Ltd. The first DES LNG cargo was successfully delivered to Futtsu, Japan, on June 27, 2024, aboard the 174,000 cubic meters LNG vessel named Grazyna Gesicka. This successful delivery to Japan marked a significant entry point into the Asian market under the DES model. Building on this achievement, NNPCL expanded its operations to China, where it has since delivered an additional LNG cargo on a DES basis.
Soneye explained the significance of using the Delivered Ex-Ship (DES) model, an international commercial term that requires the seller to take full responsibility for the shipment and insurance of the goods until they reach the specified port of delivery. “Delivered Ex-Ship (DES) is an international commercial term that requires the seller to deliver the products or goods to a specified port,” Soneye stated. “The seller is responsible for the shipping and insurance until the goods arrive at the port. Executing this model requires a higher level of expertise and efficiency compared to the more commonly used Free on Board (FOB) system, where the buyer assumes responsibility once the goods are loaded onto the shipping vessel.”
This strategic shift to the DES model is part of NNPCL’s broader vision to enhance its operational capabilities and market reach. The DES model not only provides higher financial returns but also allows NNPCL to play a more active role in the logistics and delivery aspects of LNG trading, thus giving the company greater control over its supply chain and customer engagement. This move is particularly significant given the growing demand for LNG in Asia, where countries like Japan and China are major consumers of natural gas, driven by their needs to diversify energy sources and reduce carbon emissions.
NNPCL’s involvement in LNG trading is not entirely new. The company has been active in the LNG market since 2021, with its first LNG cargo sale taking place in November of that year. Since then, NNPCL has successfully traded over 20 cargoes into European and Asian markets, primarily on an FOB basis. However, the transition to DES shipments represents a notable shift in strategy, aimed at capturing more market share and establishing NNPCL as a reliable supplier in the LNG sector.
Looking ahead, NNPC LNG Ltd, in collaboration with NNPC Shipping Ltd, has ambitious plans to further solidify its presence in the Asian market. Soneye disclosed that the company is scheduled to deliver at least two more LNG cargoes to Asia on a DES basis by November, with more orders expected before the end of the year. This proactive approach is expected to enhance NNPCL’s reputation in the global LNG market and strengthen its relationships with key international clients.
Commenting on the significance of the DES model, Dapo Segun, the Executive Vice President of Downstream at NNPCL, highlighted the financial and strategic benefits of this approach. “The DES system, apart from being more financially rewarding, allows NNPC Ltd. inroads into the downstream segment of the LNG sector and positions it to capture more market shares,” Segun noted. “This model also helps us build in-house capacity and ensures that global customers become familiar with the NNPC Ltd. brand. By taking charge of the shipping and delivery processes, we can provide a more integrated and seamless experience for our clients, which is crucial in a competitive market like LNG.”
Furthermore, NNPC Shipping Ltd is making strategic plans to expand its shipping capabilities to support NNPCL’s growing LNG operations. Panos Gliatis, the Managing Director of NNPC Shipping, expressed enthusiasm about the future of NNPCL’s shipping portfolio. “NNPC Shipping intends to build a robust shipping portfolio, including owned vessels, to provide our sister company and other clients with all the shipping flexibilities they need,” Gliatis stated. “By investing in our shipping capabilities, we are not only enhancing our operational efficiency but also positioning NNPCL as a key player in the global LNG shipping market. Our goal is to offer reliable and flexible shipping solutions that meet the diverse needs of our clients across different regions.”
NNPCL’s strategic move into the DES LNG market is a clear indication of its commitment to expanding its footprint in the global energy sector. By leveraging its downstream subsidiaries and enhancing its shipping capabilities, NNPCL is positioning itself as a competitive and reliable player in the international LNG market. As the company continues to execute its strategy, it is poised to play a significant role in meeting the growing global demand for natural gas, particularly in energy-hungry markets like Asia. Through these efforts, NNPCL not only aims to drive revenue growth but also to contribute to the global energy transition by providing cleaner and more sustainable energy solutions.
