The Case for Compressed Natural Gas

The company car that picked me up at the Simón Bolívar International Airport, Maiquetia, on the outskirts of Caracas, Venezuela, was running on compressed natural gas, or CNG. This was in August 1998. I recall asking the driver why he had a gas cylinder in his car boot next to where I put my bag and getting back a response that the cylinder is for CNG. CNG is a clear, odourless and non-corrosive gas stored in cylinders under pressure and used in vehicles as fuel. I would later learn that many cars in Venezuela, including the over ten thousand sleek and spacious white taxis on the streets of Caracas, run on CNG. At that time, the South American country, which refines more oil than it needed and, at less than five US cents (less than ten Naira) a litre, boasts of the cheapest gasoline price in the world, had also rolled out the use of CNG as vehicular fuel.

But my arrival in Venezuela in 1998 was not the first time I came in across CNG. Ten years earlier in my modest high school library in northern Nigeria we had access to various newspapers, national and international magazines and trade newsletters from various companies. One of such publications that I particularly took an interest in and which I had always looked forward to seeing on the rack was Napetcor, the in-house newsletter of the Nigerian National Petroleum Corporation, NNPC. To this day, it beats me how that newsletter gets there but I am sure, like it did in my own case, it opened a window to a possible career in oil & gas to many young minds in the school. Towards the end of the eighties the magazine carried many news items relating to NNPC’s push to have Nigerian cars run on CNG. In one edition it even published the story of a prototype car developed by Nigerian Gas Company, NGC, a subsidiary of the NNPC, which ran on CNG.

Vehicles that run on petrol or diesel can be converted to run solely on CNG using an off-the-shelf kit. In many countries vehicles are now manufactured to be bi-fuel (dual fuel), that is, run on both CNG and conventional fuels. Brazil has taken a step further by developing one that runs on three fuels; petrol, NGC and Ethanol.

Venezuela did not add CNG to its fuel mix because they were experiencing a cost or availability crisis as Nigeria currently is, they also did not do it because of CNG’s much-touted environmental benefits. The motivation for a country like Venezuela to add to the types of fuel available to its motorists is both commercial and strategic.

Commercial because it can now boast of one more hydrocarbon derivative it can sell to its citizenry, albeit too cheaply, and possibly add to the list of what it exports to neighbouring South American countries that depend on it for energy. In many countries fuel cost for a CNG vehicle is less than half of that of a gasoline vehicle. In Venezuela, where a litre of petrol is the cheapest in the world, CNG is almost free. In addition, you can have your CNG system routinely serviced for free at various service and conversion workshops scattered across the country.

It is also strategic because by embracing the CNG technology quite early, Venezuela has now become one of the pioneers of the technology and may, at some point in the future, export not only CNG but also expertise in CNG technology. At least, that was the hope of late president Hugo Chavez when in 2011 he charged the national oil company, Petroleum de Venezuela SA, or PdVSA, to accelerate the setting up of a manufacturing plant for CNG equipment. PdVSA has nearly 120 conversion workshops spread across the country and nearly 100,000 vehicles in Venezuela have been converted to CNG.

The Government of Venezuela passed legislation, effective April 1, 2009, that decreed assemblers, manufacturers, importers and marketers of motor vehicles to have either CNG or bi-fuel (gasoline/CNG) vehicles for sale in their dealerships at all times. Forty percent of the over two thousand cars assembled in Venezuela in January and February this year are powered by CNG.

The added value to the country is job creation as it requires a multitude of trained and skilled workforce to work in the conversion garages and fuelling stations within and outside the country.

Petrol is neither as available nor as cheap in Nigeria as it is in Venezuela now (or was in the 90s). The two countries, both members of OPEC, are ranked 8th and 9th in the world in proven gas reserves but Venezuela's population is about 18% that of Nigeria. So the demand curve for CNG if it ever takes off Nigeria would certainly be much steeper than that of Venezuela. As it stands today, and has been witnessed countless times in the country, a serious scarcity of petrol and diesel can potentially immobilise almost all land transportation in the Nigeria - with attendant hardship for the populace. If conversion for existing vehicles to run on CNG or bi-fuel and the manufacturing of new vehicles that run on CNG is encouraged in the country that would immediately ease or eliminate such hardship, reduce the demand for petrol - most of which is imported at great cost to the country - and also create an industry, with resultant jobs and infrastructure that did not exist a few years earlier.

Venezuela compares well with Nigeria because of its energy resources endowment when compared to countries in its immediate vicinity. This presents an opportunity to benefit from a home market and also access a wider one just outside its borders. Nigeria shares these unique features with Venezuela.

Opening this write-up with Venezuela does not in anyway negate the impact and pervasiveness of Natural Gas Vehicles, or NGVs, in the world. The take-off of NGVs, vehicles running on compressed or liquefied natural gas, in the wider world is nothing short of extraordinary - thanks in part to a deeper environmental awareness in developed nations and a desire to cut the cost of transportation in developing nations. CNG is cheaper and less polluting than fossil fuels such as Petrol or diesel, and for countries with the infrastructure, it is also more readily usable. In the USA, Phill, a home CNG refuelling compressor, is now available that enables motorists to fuel up their vehicles overnight at home.

Both Brazil and Argentina each undertake over 80,000 vehicle conversions a month and have almost two million NGVs on their roads. This is an infrastructural capacity and a number of NGVs that is almost ten times greater than Venezuela has. The growth in South America is fuelled by a drive, no pun intended, to bring down the cost of transportation to the public.

Iran on the other hand is driven by necessity to develop a robust CNG economy. When the former Iranian president, Mahmoud Ahmadinejad, wanted to mitigate the effects of crippling sanctions on the people of his gas-rich country, he anchored his energy independence drive on building a sustainable supply of cheap transportation fuel based on CNG. The aggressive plan started a programme to convert all the vehicles in the country to run on CNG within five years at a rate of 1.2 million vehicles a year. During the same period, over 10,000 filing stations were to be retrofitted to dispense CNG. To underline the seriousness of his ambition he ordered all six hundred thousand state-owned cars to be put on the conversion programme immediately. It was also decreed that by a certain date in the near future all new cars built in the country must be GNVs. Today Iran has more NGVs on the road than any other country in the world.

In Europe, the shift is to have all public intra-city transportation to be powered by CNG. France and UK are ahead of most other European countries in achieving that - the trend in Europe unlike Iran is predicated by a concern for the environment and comes with some incentive in the form of monetary grants or tax relief for individuals who convert their existing vehicles or buy new ones that use CNG.

Almost all the Nations of western Europe, the Balkans, most of the Americas and many nations in Asia are on the CNG bandwagon. Most of these countries did not have any plan on CNG when NNPC developed that prototype vehicle in the late 80s. There are currently nearly 20 million NGVs in the world, 35% of them are on South American roads.

Edo State in Nigeria leads the rest of the country in embracing the promise of CNG. It has just over ten refuelling points and, as of two years ago, about one thousand vehicles running on CNG, this is modest by all standards. Even in Africa that statistic compares unfavourably to Egypt which has nearly 120 refuelling points for over 150,000 vehicles and South Africa, a late arrival to the NGC arena but whose entrepreneurs are already harnessing plans to dominate the sub-saharan Africa CNG market.

At the NGV2014 trade show held in Johannesburg in November last year, Zazi Dladla, the Director of CNG Holdings of South Africa, set out his company’s target of accessing markets in gas-rich countries like Nigeria and Tanzania and setting up conversion garages and fuelling points. He confidently projects that his company can set up distribution infrastructure in those countries in a matter of months.

Nigeria can create an entire economy based on CNG if it so wishes. A starting point would be to turbocharge what is happening in Edo State and roll it out across the entire nation; After a head start of nearly thirty years, innovation and entrepreneurship in NGC should be exported from Nigeria and not imported.