Nigeria LNG Limited Declares Force Majeure

Nigeria LNG Limited (NLNG) has declared force majeure on product supplies from its production facilities on Bonny Island, Nigeria.

The declaration follows the declaration of force majeure by all of NLNG’s upstream gas suppliers, Andy Odeh, the company’s general manager of external relations and sustainable development, outlined in a statement posted on NLNG’s website.

“The notice by the gas suppliers was a result of high flood water levels in their operational areas, leading to a shut-in of gas production which has caused significant disruption of gas supply to NLNG,” Odeh said in the statement.

“Consequently, NLNG activated force majeure clauses in accordance with the Sales and Purchase Agreements (SPA) provisions,” Odeh added.

“NLNG is currently reviewing the situation with gas suppliers to ascertain the extent of the disruption to its operations but would, as a reasonable and prudent operator, endeavor to mitigate the impact of the force majeure to the extent reasonably possible,” Odeh continued.

In a statement posted on the Comissão do Mercado de Valores Mobiliários (Portuguese Securities Market Commission) website this week, Galp informed that it had received from NLNG Limited, its main natural gas supplier, a force majeure notice “based on the extensive flooding being experienced in Nigeria, causing a substantial reduction in the production and supply of liquefied natural gas and natural gas liquids”.

“At this stage, no information was provided to support an assessment of potential impacts from this event, which may however result in additional sourcing disruptions to Galp,” Galp said in the statement.

“Galp regrets the humanitarian impact being caused by the flooding, and will continue to monitor this situation attentively, informing on any material development,” Galp added.

In a market note sent to Rigzone this week, Rystad Energy analyst Nikoline Bromander highlighted that NLNG had declared force majeure “due to flooding in the Niger delta region”.

“It is still unclear how long it will last with around 3.8 percent of global monthly supply potentially impacted, representing an upward risk to prices,” Bromander said in the note.

To contact the author, email andreas.exarheas@rigzone.com