- A new report stated that the Nigeria Liquefied Natural Gas Limited loses 80 per cent of its natural gas supplies from its Bonny Island facility to vandalism
- The report noted that the declining output could trigger higher spot prices
- The decline in natural gas production has far-reaching implications, including potential job losses
A new report has revealed that the Nigeria Liquefied Natural Gas (NLNG) Limited loses 80 per cent of its natural gas supplies from its Bonny Island facility to vandalism.
The report by Bloomberg stated the company is left with 20 per cent of the supplies by the few available facilities to meet its natural gas needs.
Vandalism and sabotage have curtailed operations at the plant and curbed exports of liquefied natural gas, or LNG.
Recall that the Nigeria International Energy Summit held last week in Abuja, Chief Executive Officer of NLNG, Philip Mshelbila, disclosed that only two of the facility’s six processing units are currently functional, and three gas pipelines are down.
Mshelbila attributed the operational challenges to persistent attacks on its gas pipelines by vandals, even as the company decried attacks to gas pipelines.
Losses could trigger higher spot prices
The report noted that the declining output from Nigeria’s only LNG facility could trigger higher spot prices as global supply to Asia and Europe tightens.
In 2024, almost half of Nigeria’s LNG exports went to Asia, with another third going to Europe and the remaining to the Americas and Middle East, according to data compiled by Bloomberg.
According to the data, Nigeria’s LNG exports declined by 40 per cent in February from what was recorded in January, following the destruction of vital pipelines by suspected vandals.
As a result, planned shipments for next month were delayed for at least 10 days. Shell Plc. is one of the stakeholders in Nigeria LNG, along with Nigerian National Petroleum Corp., TotalEnergies and Eni.
However, a spokesperson for Shell did not immediately respond for comment even as a spokesperson for Nigeria LNG did not immediately respond for comment on the reduction in gas supply.
Decline in production has far-reaching implications
Nigeria LNG was incorporated as a limited liability company to harness Nigeria’s vast natural gas resources and produce Liquefied Natural Gas and Natural Gas Liquids for the domestic market and export.
The Federal Government has received about $21.56 billion of the $44 billion dividends disbursed by Nigeria LNG in the last 25 years.
The reduction in production capacity would have far-reaching implications. These include a decline in export earnings and potential job losses in the sector.
On Tuesday, February 25, a London court ordered Nigeria LNG to pay $380 million in compensation to two commodity traders, Vitol and Glencore, for failing to deliver 19 contracted cargoes.
FG issues 25-year gas distribution licences to boost domestic gas utilisation
The Federal Government, through the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), granted 25-year gas distribution licences to 10 companies in a move aimed at enhancing domestic gas utilisation across the country.
The licences, issued on Tuesday, January 28 in Abuja, will enable these companies to establish, construct, and operate gas distribution networks in key regions of Nigeria.
