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Flood: Gas scarcity looms as NLNG stops operations

Gas scarcity is expected to hit across the 36 States of the Federation as the Nigeria Liquefied and Natural Gas company has shut down its operations because of the widespread flooding that has disrupted supply.

According to The PUNCH, this was disclosed by the spokesperson of the company, Andy Odeh who declared a Force majeure on Monday.

Force majeure is a common clause in contracts. It basically lets both parties off the hook when something out of their control, like a war, strike, riot, crime, epidemic, or sudden change in the law, makes it impossible for one or both parties to fulfil their obligations under the contract.

Reuters said that the declaration could make Nigeria’s cash problems worse and would cut down on the supply of gas around the world at a time when Europe and other places are trying to replace Russian exports after the invasion of Ukraine in February.

NLNG said that all of its gas suppliers upstream had declared “force majeure,” so it had to do the same.

“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 assessing the severity of the disruption and will work to lessen its effects.

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

The flooding, which was brought on by unusually high rains and the discharge of water from a dam in Cameroon, may go into November, according to officials.

Due to widespread oil theft, which has reduced output from what is generally Africa’s top exporter, the supply of NLNG was already constrained. Refinitiv data shows that in September, NLNG shipped about 18 cargoes.

Nigeria exports fossil fuels, which account for 90% of its foreign exchange and almost 50% of its budget. Due to theft that has approached 80% on some pipelines, the average amount of crude oil exported daily in August fell below one million barrels, the lowest level since the 1980s.

The most populous country in Africa has been unable to gain from the rise in oil prices this year due to crippling fuel subsidy expenses.

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