Ali Elias
Pipeline Vandalism, Legal Setbacks, and Revenue Threats Rock Gas Giant
Nigeria Liquefied Natural Gas Limited (NLNG) is facing a worsening operational crisis as gas supplies to its Bonny Island facility have plummeted by 80%, crippling production and raising concerns over the company’s future earnings, according to a Punch Newspaper report citing Bloomberg data.
The situation, which has persisted for weeks, threatens Nigeria’s projected 2025 dividends of ₦727 billion, a massive 113% increase from the ₦346 billion paid in 2024. The revenue shortfall could deal a significant blow to Nigeria’s economy, given that NLNG is one of the country’s largest revenue-generating entities.
Gas Supply Crisis and Pipeline Attacks
NLNG’s Chief Executive Officer, Philip Mshelbila, recently disclosed at the Nigeria International Energy Summit in Abuja that only two of the facility’s six processing units are currently operational, with three key gas pipelines damaged due to persistent attacks by vandals.
“There is an ongoing crisis with our gas supply. Vandalism and sabotage have severely affected our operations, cutting gas availability by 80%,” Mshelbila revealed.
He further emphasized the long-term impact of these disruptions, warning that unless urgent measures are taken, Nigeria’s ability to meet its domestic and international LNG obligations could be compromised.
The Punch Newspaper report noted that Nigeria’s LNG exports declined by 40% in February compared to the previous month, primarily due to the destruction of vital pipelines. This decline has already delayed planned shipments for March by at least 10 days.
Global Impact and Rising LNG Prices
The falling output from Nigeria’s only LNG export facility is expected to tighten global gas supply and may increase spot prices in Asia and Europe. Data compiled by Bloomberg indicates that in 2024, nearly half of Nigeria’s LNG exports were shipped to Asia, one-third to Europe, and the rest to the Americas and the Middle East.
With fewer shipments coming out of Nigeria, buyers in Europe and Asia may face higher gas prices, further intensifying the global energy crisis.
Financial and Legal Setbacks for NLNG
The current production crisis is not just an operational concern—it has serious financial and legal ramifications for NLNG.
Last Wednesday, a London court ordered NLNG to pay $380 million in damages to two global commodity traders—Vitol and Glencore—for failing to deliver contracted cargoes. The ruling adds to the growing financial burden on the company, already struggling with declining production and pipeline disruptions.
Additionally, Shell Plc., Nigerian National Petroleum Corporation (NNPC), TotalEnergies, and Eni, all major stakeholders in NLNG, have yet to publicly respond to the worsening crisis.
A spokesperson for Shell Plc. did not immediately comment on the gas supply reduction, while NLNG representatives have remained silent on the latest developments.
Nigeria’s Stake in NLNG and Revenue Impact
NLNG, which was incorporated to harness Nigeria’s vast natural gas resources, has played a crucial role in foreign exchange earnings for the country. Over the past 25 years, NLNG has disbursed $44 billion in dividends, out of which the federal government has received approximately $21.56 billion.
However, the ongoing operational challenges could significantly reduce the government’s earnings, adding more pressure to an economy already facing foreign exchange shortages and fiscal deficits.
Security Challenges in the Niger Delta
The security crisis in the Niger Delta region, where most of Nigeria’s oil and gas infrastructure is located, has persisted for years. Despite government efforts to combat pipeline vandalism, armed groups and organized criminal networks continue to sabotage energy infrastructure for financial gain.
Industry analysts warn that unless NLNG strengthens security measures and the government implements stricter protections, these attacks could continue to disrupt the country’s gas supply and economic stability.
What’s Next for NLNG?
With its dividends under threat, an international court ruling against it, and mounting operational hurdles, NLNG faces an uncertain future.
Stakeholders in the gas industry are calling for immediate intervention, including, Enhanced pipeline security to curb vandalism, Emergency repairs on damaged infrastructure, Government intervention to stabilize production, Increased investment in alternative supply routes
Nigeria’s ability to maintain its position as a key global LNG supplier will depend on how quickly and effectively these challenges are addressed.