Published by SpringNewsNG Media Limited

Pipeline vandalism is threatening Nigeria LNG Limited’s (NLNG) operations, endangering the country’s energy sector and putting its projected N727 billion dividends for 2025 at risk. According to NLNG’s Managing Director, Philip Mshelbila, only two of the company’s six gas processing trains are operational due to persistent attacks on pipelines.

Severe Impact on Gas Supply and Revenue

The vandalism crisis has crippled gas supply to NLNG, which plays a crucial role in Nigeria’s economy and the global energy market. The company depends on a vast pipeline network to transport natural gas from upstream suppliers to its Bonny Island facility. However, repeated sabotage has significantly reduced supply, leaving four trains inactive.

“At present, I am only running two trains out of six. Three of our critical gas supply pipelines—GTS 1, GTS 2, and GTS 4—are shut down due to illegal connections by thieves,” Mshelbila stated at the Nigeria International Energy Summit in Abuja.

Nigeria Losing Global LNG Market Share

Mshelbila expressed concern over Nigeria’s declining reliability as an LNG supplier, noting that despite strong international demand, the country is unable to meet commitments. “Since the Russia-Ukraine war, I have been approached by several European and other countries for LNG, but we are unable to supply due to these disruptions. Look at Qatar and the US; we simply can’t compete,” he lamented.

Billions in Revenue at Stake

NLNG, which accounts for about 7% of global LNG supply, is a major revenue source for Nigeria. Experts warn that ongoing vandalism could derail its projected N727 billion dividends to the Nigerian government in 2025—a 113% increase from the N346 billion recorded last year.

According to BusinessDay data, Nigeria’s federal government has received approximately $21.56 billion of the $44 billion dividends disbursed by NLNG in the last 25 years. The company, a joint venture between Nigerian National Petroleum Company Limited (49%), Shell (25.6%), TotalEnergies (15%), and Eni International (10.4%), was established to harness Nigeria’s gas resources for domestic and export markets.

Economic and Security Challenges

The decline in production capacity could have far-reaching effects, including reduced export earnings and job losses. Security concerns in the Niger Delta, where Nigeria’s oil and gas infrastructure is concentrated, continue to exacerbate the situation. Despite government and private sector efforts to curb pipeline vandalism, the problem remains widespread.

Mshelbila stressed the urgent need for a multi-stakeholder approach to safeguard Nigeria’s gas infrastructure. “Energy security must be treated as national security. Until we secure these pipelines, we will keep underperforming,” he warned.

Legal and Financial Repercussions

In a related development, a London court recently ordered NLNG to pay $380 million in damages to commodity traders Vitol and Glencore for failing to deliver contracted LNG cargoes. The lawsuit, initiated by trading firm Taleveras, resulted in NLNG being held liable for undelivered cargoes between 2020 and 2021. Following a failed appeal, NLNG is now required to pay approximately $260 million to Vitol and $120 million to Glencore.

Taleveras, founded in 2004 by Nigerian businessman Igho Sanomi and based in Dubai, had pre-sold some of the cargoes to Vitol and Glencore. When deliveries fell through, the Swiss-based companies sued Taleveras, triggering a legal chain reaction that ultimately implicated NLNG.

NLNG has stated that it is reviewing the court’s decision but has declined further comment. Meanwhile, Shell, Eni, TotalEnergies, Vitol, Glencore, and Taleveras have also refrained from making public statements on the ruling.

Conclusion

With NLNG facing operational setbacks, legal challenges, and revenue losses, urgent measures are needed to curb pipeline vandalism and restore Nigeria’s standing in the global LNG market. Ensuring security and stability in the country’s energy sector is critical for sustaining economic growth and maximizing revenue potential.