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By Adewale Sanyaolu
Funding for Nigeria’s N21.83 trillion 2023 budget may have started on a shaky note as the Nigeria LNG, has canceled several gas shipments due to vandalism on its pipelines that disrupted operations, sources familiar with the matter told Bloomberg at the weekend.
The Nigeria LNG Limited had said it paid over $7 billion in taxes and more than $17.5 billion as dividend to the Federal Government since its inception in 1989.
There could have been as many as 10 cargoes canceled, one of Bloomberg’s sources said. Nigeria LNG has also declared a force majeure on export cargoes and scrapped at least 2 loadings scheduled for January.
More LNG cargoes planned to load in February could also be canceled, according to Bloomberg’s sources.
The disruption in Nigeria LNG’s exports comes as Europe continues to look for LNG shipments to replace the lost Russian pipeline supply and start replenishing in April gas storage sites for next winter once this winter is over.
But NLNG in a statement at the weekend by its General Manager, External Relations and Sustainable Development, Andey Odeh, confirmed that operations at its plant on Bonny Island are still active despite a Force Majeure declared in October 2022 and feedgas supply challenges.
He said the plant continues to produce LNG and LPG commensurate to the feed gas it receives from its upstream gas suppliers.
“In addition to ensuring steady operation, NLNG remains committed to its culture of transparency and maintains consistent communication with key stakeholders on developments in the upstream sector”, the statement said.
“The company is closely monitoring the resolution of supply challenges by all relevant parties, ” the statement concluded.
Despite the recent plunge in the European benchmark gas prices to below the North Asian benchmark, Europe continues to attract most of the U.S. exports of LNG as demand in Asia is still weak.
Nigeria has also supplied a lot of LNG to Europe in recent months.
Nigerian LNG accounted for 70 per cent of the European supply of the super-chilled fuel in 2022, per data compiled by BloombergNEF.
Nigerian LNG and oil supply have suffered in recent years from floods as well as pipeline vandalism, which has often forced operators to declare force majeure on crude oil exports.
The combination of pipeline vandalism and oil theft with a lack of investment in capacity has made Nigeria the biggest laggard in crude oil production in the OPEC+ alliance.
Surveys and analyst estimates pointed to a rebound in Nigeria’s oil production in December 2022, but the African OPEC producer is still significantly trailing behind its OPEC+ quota.
A rebound in Nigerian production raised OPEC’s oil output in December by 120,000 barrels per day (bpd) compared to November, according to a monthly Reuters survey published last week. The Bloomberg survey of OPEC production also showed a rise in output for December, by 150,000 bpd over November, thanks to the rebound in Nigerian oil production.
