…As only two of six trains operational- Mshelbila
The Nigeria LNG Limited (NLNG) has announced that only two of its six trains are currently operational, thanks to the activities of pipeline vandals.
The development is a threat to the nation’s revenue streams and Nigeria LNG’s N727 billion dividends.
Philip Mshelbila, managing director of Nigeria LNG, lamented the impact of the attacks, which have severely disrupted gas supply and crippled production.
According to Mshelbila, the Nigeria LNG, which plays a critical role in Nigeria’s economy and global energy market, has been forced to operate at a fraction of its capacity.
The company relies on a network of pipelines to transport natural gas from upstream suppliers to its Bonny Island facility.
However, frequent attacks on these pipelines have led to a drastic reduction in gas supply, having left four of the company’s six trains idle.
“In the current moment, I am only running two trains out of six. Three of our gas supply pipelines are down for repairs due to illegal connections by thieves. These are critical lines—GTS 1, GTS 2, and GTS 4—that supply the energy required for our operations,” Mshelbila said at a panel session during Nigeria International Energy Summit on Wednesday in Abuja.
Mshelbila expressed deep concern over the situation, stating that the vandalism not only undermines Nigeria’s reputation as a reliable LNG supplier but also results in significant revenue losses for the country.
“Since the Russian war, I have been approached by dozens of European and other countries for LNG but we have been unable to supply because of this. You see what is happening with Qatar and the US. We can’t compete,” Mshelbila said.
The Nigeria LNG, which accounts for about 7 percent of global LNG supply, has been a major contributor to Nigeria’s economy, generating billions of dollars in revenue annually.
Experts have warned that the persistent attacks on Nigeria LNG’s gas supply pipelines could jeopardise its projected dividends of N727 billion to the Nigerian government by 2025, a 113 percent growth from N346 billion last year.
Read also:NPA pledges support for NLNG to drive export trade
Data sourced by BusinessDay showed the federal government has received about $21.56 billion of the $44 billion dividends disbursed by Nigeria LNG in the last 25 years.
Nigeria LNG was incorporated as a limited liability company to harness Nigeria’s vast natural gas resources and produce Liquefied Natural Gas (LNG) and Natural Gas Liquids (NGLs) for the domestic market and export.
It is owned by four shareholders: Nigerian National Petroleum Company Limited (49 percent), Shell (25.6 percent), TotalEnergies (15 percent) and Eni International (10.4 percent).
The reduction in production capacity is expected to have far-reaching consequences, including a decline in export earnings and potential job losses in the sector.
Security challenges in the Niger Delta region, where most of Nigeria’s oil and gas infrastructure are located, have persisted for years.
Despite efforts by the government and private sector to curb pipeline vandalism and oil theft, the problem remains rampant.
Mshelbila called for urgent action to address the security issues, emphasising the need for collaboration between the government, communities, and industry stakeholders.
“Energy security has to be seen as important as national security. However, gas security has deteriorated, and until we can safeguard these pipelines, we will continue to underperform,” he said.
On Wednesday, a London court ordered Nigeria LNG to pay $380 million in compensation to two commodity traders – Vitol and Glencore – for failing to deliver contracted cargoes.
Taleveras, a trading firm that instituted a legal battle against NLNG four years ago, had secured LNG supply deals with the Nigerian gas venture but did not receive the agreed 19 cargoes between 2020 and 2021.
According to Reuters, court documents show that Taleveras had pre-sold some of the cargoes to the Switzerland-based companies. However, when deliveries failed, Vitol and Glencore took legal action against Taleveras, leading to a chain of litigations.
Last week, an appeal by NLNG was dismissed, affirming that the company was required to pay approximately $260 million to Vitol and $120 million to Glencore.
In response, the publication said NLNG stated that it is reviewing the court’s decision but declined further comment.
Shell, Eni, and TotalEnergies also declined to comment, while Vitol, Glencore, and Taleveras did not respond to requests for remarks.
Taleveras, founded in 2004 by Igho Sanomi, a Nigerian businessman, is based in Dubai.
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