June 19, 2024

Nigeria’s gas supply to Europe disrupted, as NLNG declares force majeure due to flooded oil communities

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Oredola Adeola

The Nigeria LNG Limited(NLNG) has declared force majeure on LNG supplies after flooding disrupted the feed gas supply to its  22mn t/yr Bonny Island LNG export facility, in River State.

This was confirmed in a statement released by Mr. Andy Odeh, NLNG, General Manager, External Relations and Sustainable Development, and obtained by EnergyDay on Monday.

Odeh said that the declaration was a result of high flood water levels in their operational areas, leading to a shut-in of gas production which has caused a significant disruption of gas supply to NLNG.

He also noted that the company is evaluating the extent of the disruption and would try to mitigate the impact of the force majeure.

While no further details were provided on how long the force majeure will last, or the volume of exported products that would be affected, EnergyDay’s check showed that the development is likely to disrupt Nigeria’s LNG supply to Europe and other countries amid the standoff between Russia and the West over Ukraine, as well as Russian gas supply cut to Europe.

EnergyDay gathered that Nigeria is a major source of LNG supply to Europe, as the country in 2021 exported 12.63 Billion cubic metres to the West.

The country’s biggest buyers include Spain (49 cargoes supplied — or 4.3 Bcm of gas equivalent,  France (38 cargoes), Portugal (34 cargoes), and Turkey (15 cargoes), this is according to the data obtained from S&P Global Platts Analytics.

EnergyDay also gathered that several LNG cargoes were also delivered last year each to Croatia, Greece,  Italy, the Netherlands, and the UK.

Nigeria’s six-train LNG export facility has a capacity of 22.5 million mt/year (31 Bcm/year) but has been curtailed due to frequent attacks, sabotage, and shut-in on supply and export pipelines.

Despite this, NLNG hopes to increase its capacity to about 30 million mt/year as work continues on its train 7.

The flood crisis is therefore likely to worsen Nigeria’s financial crisis after the country’s revenue from LNG sales rose by 64.32 percent in the first quarter of 2022 (Q1’22) to N119.4 billion compared to N72.64 billion recorded in the corresponding period last year.

According to preliminary ship-tracking data from Vortexa, NLNG after completing maintenance in mid-September shipped 3-5 LNG cargoes a week.

The data also showed that 3 empty carriers that had been heading for Bonny appeared to change course and were heading away from the facility on Monday due to the flooding crisis.

The country’s meteorological agency has warned that the flooding could last until the end of November in several southern states, including Delta.

The National Emergency Management Agency (NEMA) in a statement obtained by EnergyDay revealed that thousands of people were affected by the devastation caused by recent floods that ravaged Bayelsa State.

According to a report by the Bayelsa state government, 700,000 persons have been displaced in about 300 communities and villages in five of the State’s eight local government areas that were submerged in water due to rains causing the floods.

The Nigerian Metrological Agencies has also warned that major oil producing States including Anambra, Delta, Cross River, Rivers, and Bayelsa are at risk of experiencing floods up till the end of November, as a result of the irregular heavy rains and water released from Lagdo Dam, in Cameroon.

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