The continued shutdown of operations by Nigerian Liquefied Natural Gas Ltd (NLNG) is posing a serious risk to the country’s annual gas production of 22 million tonnes. NLNG declared a force majeure in October 2022 due to widespread flooding that disrupted supplies, and this force majeure continues to impact feed gas supplies due to the unavailability of upstream gas suppliers’ major liquids’ evacuation pipelines, caused by sabotage and vandalism.
Force majeure is a contractual clause that frees both parties from liability or obligation when unforeseen external events beyond their control prevent the fulfillment of contractual obligations. NLNG is collaborating with customers to minimize the impact of the resulting gas supply shortage.
NLNG, a joint venture owned by Nigerian National Petroleum Company Limited, Shell Gas B.V., TotalEnergies Gaz & Electricité Holdings, and Eni International N.A. N.V. S.àr.l, has a production capacity of 22 million tonnes per annum, primarily delivered to clients in Europe and operates spot agreements across major LNG markets. It is also the largest gas supplier to the Nigerian market.
The ongoing shutdown is not only affecting gas production but also having a ripple effect on power generation, as gas shortages impact power plants connected to the national grid. The Nigerian Electricity Regulatory Commission has emphasized the need for infrastructure investment and operational procedures to improve real-time grid visibility and enforce grid discipline.
Opinion:
The situation highlights the vulnerability of Nigeria’s gas supply infrastructure, as disruptions caused by external factors like sabotage and vandalism can have far-reaching impacts on energy production and the broader economy. Efforts to secure and maintain critical infrastructure, ensure security, and develop a diversified energy mix are crucial for the stability and growth of Nigeria’s energy sector.
The connection between gas supply and power generation underscores the interdependence of different sectors in an economy. Addressing challenges in one sector, such as gas supply disruptions, can have positive cascading effects on other sectors, such as power generation and industrial production. The need for infrastructure investment and efficient operational procedures, as highlighted by the Nigerian Electricity Regulatory Commission, becomes even more critical in ensuring energy security and stability.