NLNG’s ongoing Force Majeure and its impact on Nigeria’s LPG Industry

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  • Author: Muyiwa Ige(LPG Stakeholder and Consultant)

The Force Majeure declared by the Nigeria Liquefied Natural Gas Company (NLNG) in the aftermath of the Force Majeure pronouncement by all its upstream gas suppliers in October 2022, remains active.

A force majeure clause in a contract protects a party from sanctions/litigations, when they fail to fulfill their contractual obligations to other parties, as a result of a disruption of their operations by adverse circumstances beyond their control.

Contrary to insinuations in some quarters that the Force Majeure declared by NLNG had resulted in a halt in the production and supply of LPG to the domestic market, LPG, as well as LNG, are still being produced and loaded into gas carriers at the Plant’s export terminals.

Niglpgas.com can confidently corroborate the statement credited to the General Manager, External Relations and Sustainable Development, Mr. Andy Odeh, that NLNG continues to load LNG and LPG cargos, at its Bonny Island Plant.

Niglpgas.com can confirm that since its Force Majeure declaration in October 2022, NLNG has consistently supplied its selected off-takers in the country, through Alfred Temile, its chartered LPG Carrier dedicated for the Nigerian market.

The LPG Vessel has been delivering gas at the coastal LPG depots in Lagos and Port-Harcourt week-in, week-out ever since, albeit at a reduced frequency.

 The reduction in the volume of LPG(Cooking Gas) being supplied by NLNG, which is as a direct result of inadequate feed gas supply from its upstream suppliers, has forced the major LPG Marketers and Dealers to increase their importation quota of the product - which apparently comes at a great cost.

The high landing cost of imported LPG cargos is essentially what is reflecting in the high ex-depot and retail prices of the product in the country.

The approaching latter part of the raining season usually characterized by severe flooding, which puts some of the feedgas pipelines of upstream companies out of action, further threatens to substantially lower the production output of LPG from NLNG;  which will make increased importation of cooking gas into the country inevitable.

Therefore, all hands must be on deck to effectively secure the feedgas lines connected to NLNG Bonny Plant from vandalism/sabotage, and mitigate against flooding in the operational areas of upstream Oil and Gas companies.