NLNG’s Force Majeure holds strong, a year on

The force majeure declared at NLNG in October 2022 continues to exert its impact, as confirmed in a recent report by S&P Global Commodity Insights. According to a spokesperson at the Nigeria Liquefied Natural Gas (NLNG) Limited on November 8, the force majeure remains in effect due to the Bonny plant’s operation below 50%. The spokesperson elaborated on the ongoing challenges, stating, “Supply of gas to the Bonny plant still faces major constraints and is keeping production at the plant well below capacity. The force majeure remains in place.”

Persisting attacks on pipelines and diminished output from aging wells contribute to the disruption of gas supplies to the Bonny plant. Philip Mshelbila, the managing director of NLNG, emphasized the impact of these challenges, highlighting that such disruptions have resulted in production remaining under 50% of the plant’s total installed capacity.

In response to these challenges, NLNG is actively exploring alternative sources of gas beyond its regular suppliers to optimize the performance of the existing six trains at the facility. Notably, disruptions in gas supply had already reduced the plant’s production to 68% of its maximum operational capacity last year.

The force majeure declared in October 2022 was a response to similar declarations by all upstream gas suppliers to NLNG. These declarations were prompted by high flood water levels in their operational areas, leading to a shut-in of gas production and causing significant disruptions in gas supply to NLNG.

Providing more insights into the matter, NLNG’s six trains currently hold a capacity of 22.5 million metric tons per year, equivalent to 31 billion cubic meters per year. The facility is undergoing expansion to boost its capacity to 30 million metric tons per year with the addition of a seventh train, which is currently at a 52% completion rate.

In terms of export figures, Nigeria’s total LNG exports reached around 14.7 million metric tons in 2022. However, in 2023, the figures stand at 12.5 million metric tons so far, based on data from S&P Global Commodity Insights. Notably, Spain emerged as the top importer of Nigerian LNG in 2023, taking in 3.3 million metric tons, followed by Portugal at 1.4 million metric tons, and China at 0.9 million metric tons.

In a related development, it was reported by Infostride News (formerly Nairametrics) that NLNG Managing Director, Dr. Philip Mshelbila, recently announced that the company’s plans to enhance its gas processing capacity through the construction of an additional Train 8 are no longer viable. This announcement was made in the presence of the Minister for Gas, Ekperikpe Ekpo, during an event in Bonny.

Ekperikpe Ekpo highlighted that the company is grappling with an inadequate supply of feed gas, a situation attributed to widespread crude oil theft. The theft has significantly impeded oil and gas operations over several years and has intensified due to the declining production of the country’s crude oil and its associated gas.

In summary, the force majeure at NLNG, declared in response to disruptions in gas supply, remains active as the facility operates below its capacity. The challenges posed by recurrent attacks on pipelines and reduced output from aging wells continue to impact NLNG’s production. The company is actively seeking alternative gas sources and is undergoing an expansion to increase its overall capacity. Meanwhile, the dynamics of Nigeria’s LNG exports have shifted, with Spain leading as the top importer in 2023. The broader challenges in the oil and gas sector, including crude oil theft and declining production, further compound the difficulties faced by NLNG in maintaining optimal operations.