NLNG Announces Force Majeure - Implications For The Nigeria LPG Industry

By LPG in Nigeria ــ Last Update 20 October 2022

1310
0

Nigeria LNG Limited (NLNG) has declared force majeure on product supplies from its production facilities on Bonny Island, Nigeria following the declaration of force majeure by all its upstream gas suppliers.

The notice by the NLNG resulted from 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. Consequently, NLNG activated force majeure clauses in accordance with the Sales and Purchase Agreements (SPA) provisions.

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.

Andy Odeh

General Manager, External Relations and Sustainable Development

( source NLNG website)

The impact on the Nigeria LPG industry

Industry reports show that NLNG is responsible for the supply of a significant portion of the Nigeria's LPG market volumes. By the end of August 2022, NLNG had supplied over 40% of the market's LPG; this is how significant disruption in LPG supplies from NLNG could cause for the industry.

LPG price increase

We have experienced a push upward in price during the week, in a week where international prices went down previously; and this is a result of market sentiments.

LPG scarcity

With 40% of the LPG supply gone, we should experience scarcity over a prolonged ( 2weeks) period of time.

The resumption of LPG supplies from NLNG

Information from close industry watchers, suggests that NLNG will be able to deliver volumes into the market in less than a week. Also, we do not expect further damage from the flooding and so we expect the full resumption of LPG supplies in 2 weeks.