January 16, 2023

Nigeria LNG’s October force majeure on upstream supplies still in place; no new FM declared

Nigeria LNG continues to operate its 22.2 mtpa plant on Bonny Island at a reduced rate as a force majeure declared in October on upstream supplies remains in place.

Continued weak production at the Nigeria LNG (NLNG) plant has sparked talk of the firm declaring a new FM on supplies and cancelling cargoes because of possible pipeline sabotage.  The firm dismissed talk of a new FM but did not address Kpler’s queries as to whether any of the pipelines supplying feed gas to its LNG plant had been attacked, impacting production and exports.

“NLNG declared FM on Oct. 17, 2022 - the force majeure is still in place,”  company spokesman Andy Odeh, who is General Manager, External Relations and Sustainable Development, said in an email response to Kpler. “Nigeria LNG Limited (NLNG) declared force majeure following the declaration of force majeure by its upstream gas suppliers.”

Term offtakers said they received notification from NLNG that the FM was still in place, with this now due to pipeline sabotage. NLNG was forced to declare FM on LNG supplies from Bonny in October last year after all its upstream gas suppliers declared FM on gas supplies to the plant due to high flood water levels that caused a shut-in of gas production and significant disruption to gas supplies to NLNG.

Production and exports from Bonny have not stopped despite the FM declaration three months ago, but have yet to return to pre-FM levels. It is unclear when production at the plant will normalize, with this dependent on the feed gas supplies it receives from upstream suppliers, the firm said.

“NLNG continues to focus on managing the impact of the force majeure in accordance with provisions of the various agreements while maintaining production to the optimum levels commensurate to the feed gas it is receiving from its gas suppliers,” Odeh said. He did not comment on when the firm is likely to lift its FM.

The FM applies to all of NLNG’s term contracts. Firms such as Shell, TotalEnergies, Eni, Enel, Botas, Naturgy, Galp, Vitol, Endesa, Pavilion Energy have offtake agreements with NLNG. NLNG did not comment on whether any term deliveries had been cancelled at the time of its FM declaration in October but said it “would, as a reasonable and prudent operator, endeavour to mitigate the impact of the force majeure to the extent reasonably possible.”

Utilization rates at the Bonny Island plant ranged between 55% and 58% between October and December last year, but fell to their lowest level at 51% in August. The plant operated at higher levels but still below capacity, at 65%-83%, between January and July last year, according to Kpler data.

Kpler data show NLNG exported 1.06 mt in October, down from 1.11 mt in September and 1.23 mt a year earlier. And, in November and December, it shipped 1.06 mt and 1.04 mt, respectively. But, the Bonny Island plant suffered the largest production dip from August, contributing to its 14.5% decline in exports last year to 14.6 mt from 17.17 mt in 2021. Its exports last year sank to their lowest level in August at 0.96 mt, falling by about 27% from July 2022 and by about 39% from August 2021.

Kpler data show exports from Bonny this month could climb to 1.37 mt, up from last month but below a year ago when it shipped 1.56 mt. And exports this week could reach 0.35 mt, a level it last reached during the week beginning Feb. 28, 2022, the data show.

The plant has already shipped eight cargoes this month, with 11 more cargoes scheduled to be shipped up to Jan. 30, according to Kpler data. It could load one more cargo this month, but Kpler estimates only a 42% probability of the Petrobras-controlled 155,000m3 Cool Rider LNG tanker calling at Bonny on Jan. 19. NLNG shipped 23 cargoes from Bonny in January last year. The plant is capable of shipping around 30-31 cargoes based on a 60,000 t size, assuming production at nameplate capacity.

The 174,000 m3 Vivirt City LNG tanker was scheduled to call at Bonny on Jan. 10 but cancelled its port call, while LNG River Niger is now expected to arrive at Bonny on Jan. 24 instead of Jan. 27, the data show.

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