Tuesday, October 18, 2022

Nigeria LNG declares force majeure as flooding disrupts gas supply

Nigeria LNG has declared force majeure because of widespread flooding that has disrupted supply, a spokesman for the company said on Monday.

The declaration could worsen Nigeria's cash crunch and will curtail global gas supply as Europe and others struggle to replace Russian exports due to the invasion of Ukraine in February.

NLNG said all of its upstream gas suppliers had declared force majeure, forcing it to make the declaration as well.

"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," spokesperson Andy Odeh said.

Odeh said NLNG was determining the extent of the disruption and would try to mitigate the impact of the force majeure.

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

NLNG's supply had already been limited due to prolific oil theft that has slashed output from what is typically Africa's largest exporter. NLNG had exported roughly 18 cargoes in September, according to Refinitiv data.

Nigeria relies on fossil fuel exports for 90% of its foreign exchange and roughly half its budget. Crude oil exports fell below 1 million barrels per day (bpd) on average in August, the lowest level since the 1980s, due to theft that has exceeded 80% on certain pipelines.

Crushing fuel subsidy costs have also kept Africa's most populous nation from benefiting from this year's surge in oil prices. 

By Libby George


Related stories: Video - Aid workers struggling to reach victims of floods in Nigeria

Video - Nigeria floods: Thousands of displaced people in need of help

No comments:

Post a Comment