Flood menace: NLNG Declares Force Majeure over overwhelming flood

*Supply of Gas threatened, fear of poor revenue

The Nigeria Liquefied Natural Gas Limited (NLNG) has shut down its 22mTPA gas liquefaction and export plant in Bonny Island, Rivers State due excessive flood.

The company has therefore declared Force Majeure to both local and it’s international partners.

The announced was made by NLNG’s General Manager, External Relations and Sustainable Development, Andy Odeh on Monday, October 17, 2022.

The announcement has sparked fears of a downward revenue for the nation’s revenue, high cost of gas prices, dwindle of cooking gas supplies and loss of jobs.

According to Odeh, all of the company’s upstream gas suppliers had declared Force Majeure, leaving it with no other option than to make the declaration as well, predicating the critical judgment call to the flooding situation southern Nigeria.

“The notice by the gas suppliers was a result of high floodwater levels in their operational areas, leading to a shut-in of gas production which has caused significant disruption of gas supply to NLNG.”

Odey said that NLNG was determining the extent of the disruption and would try to mitigate the impact of the Force Majeure.

This latest development causing  concerns among experts that Nigeria facing additional revenue loses to the ongoing cash crunch being faced already and cut down of global gas supply as Europe and other countries struggle to replace Russian exports due to the invasion of Ukraine.

Flooding in Nigeria has killed more than 600 people, displaced 1.4 million and destroyed roads and farmland. 

According to the National Emergency Management Agency (NEMA), about 2,504, 095 persons have been affected by the worst natural disaster that ravaged the country in several years.

Officials have warned that the flooding, caused by unusually heavy rains and the release of water from a dam in Cameroon, could continue into November.

The NLNG’s supply had already been limited due to prolific oil theft that had slashed output from what was typically Africa’s largest exporter. In September 2022, the company was able to export only about 18 cargoes, according to industry data.

The company had declared recently that it lost almost $7 billion this year as a result of the impact of the alarming oil theft and pipeline vandalism as it was no longer operating at its nameplate capacity of 22mtpa due to gas shortages.

Nigeria relies on fossil fuel exports for 90 per cent of its foreign exchange and roughly half its budget. Crude oil exports fell below one million barrels per day (bpd) on average in August, the lowest level since the 1980s, due to theft that has exceeded 80 per cent on certain pipelines.

According reports,aside the flooding problem, NLNG’s seventh train may face delays in project delivery timeline due to the ongoing disagreements between its construction contractor, Daewoo Engineering and Construction Nigeria Limited (DECN) and its workers on the Train 7 project.

The industrial crisis that has lasted almost two months and caused downtimes, damage to equipment and led to the management sacking almost 3,000 workers has become an albatross for the project as a whole.