NLNG’s Operational Crisis Deepens: What It Means For Nigeria’s Gas Industry

NLNG’s Operational Crisis Deepens: What It Means For Nigeria’s Gas Industry

Nigeria’s Liquefied Natural Gas (LNG) sector is facing a severe crisis as gas supplies to NLNG Limited’s Bonny Island facility have plummeted by 80%, leaving the company operating at just one-fifth of its required capacity. This prolonged supply disruption, caused by persistent pipeline vandalism, has crippled production, reduced exports by 40%, and is raising concerns about Nigeria’s economic stability and global energy commitments.

NLNG’s Struggles: A Major Blow to Nigeria’s Gas Industry

At the Nigeria International Energy Summit (NIES), NLNG’s Managing Director, Philip Mshelbila, lamented that only two out of six LNG trains are currently operational. This drastic cut in production is jeopardizing Nigeria’s ability to meet global LNG demand, particularly in Asia and Europe, which rely heavily on Nigerian gas exports.

“In 2024, almost half of Nigeria’s LNG exports went to Asia, with another third going to Europe,” Bloomberg data revealed. With Europe facing energy security concerns due to geopolitical tensions, the reduced output from Nigeria could further tighten global LNG markets and increase spot prices.

Economic Implications: A Loss Nigeria Cannot Afford

NLNG is one of Nigeria’s biggest revenue earners, contributing billions of dollars annually to government coffers. However, with exports declining by 40% in February alone, Nigeria is losing a critical source of foreign exchange, further straining an economy already struggling with inflation and currency depreciation.

 

The federal government was projected to receive N727 billion in NLNG dividends by 2025, a 113% increase from last year’s N346 billion. However, if these supply disruptions continue, these projections may not be realized, adding to the government’s financial woes.

Pipeline Vandalism: A National Security Concern

The primary cause of NLNG’s crisis is the relentless vandalism of gas supply pipelines in the Niger Delta region. Criminal syndicates and militant groups have repeatedly sabotaged infrastructure, leading to production shutdowns.

Mshelbila emphasized the need for stronger security measures, stating that “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.”

 

What This Means for Nigeria’s Gas Industry - LPG in Nigeria Perspective

1. Reduced Export Revenue

With LNG exports significantly down, Nigeria is losing valuable foreign earnings, which could impact budgetary allocations, infrastructure projects, and foreign reserves.

2. Higher Global Gas Prices

Nigeria’s supply disruption is already affecting global LNG markets, particularly in Asia and Europe, where tighter supply may lead to higher spot prices.

3. Threats to Domestic Gas Supply

If security challenges persist, Nigeria’s domestic gas market could also feel the pinch, affecting industries that rely on LPG, CNG, and power generation.

4. Increased Investment Uncertainty

Foreign investors may hesitate to invest in Nigeria’s gas sector if security concerns remain unaddressed, potentially slowing down critical infrastructure projects needed for gas expansion.

The Path Forward: Securing Nigeria’s Gas Future

To protect Nigeria’s multi-billion-dollar LNG sector, the government must:

✅ Strengthen pipeline security in the Niger Delta to prevent further vandalism.
✅ Fast-track repairs on damaged pipelines to restore production capacity.
✅ Encourage investment in alternative gas transportation solutions, such as floating LNG terminals.
✅ Implement long-term policies to safeguard energy security and boost investor confidence.

The NLNG crisis is a wake-up call for Nigeria to prioritize gas security, infrastructure resilience, and investment stability. Without urgent intervention, the country risks falling behind in the global energy transition and losing its status as a key LNG exporter.

Source: Businessday NG

 

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