NLNG suspends operations due to floods, gas shortage looms


NLNG suspends operations due to floods, gas shortage looms

The Nigeria Liquefied and Natural Gas Company (NLNG) has declared force majeure due to widespread flooding that has disrupted supplies, a company spokesman said Monday.

Force majeure is a common clause in contracts that essentially releases both parties from liability or obligation if an extraordinary event or circumstance beyond the parties' control, such as war, strike, riot, crime, epidemic, or sudden legal change, prevents one or both parties from fulfilling their obligations under the contract.

The declaration could exacerbate Nigeria's cash shortages and restrict global gas supplies as Europe and other countries seek 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 gas suppliers' notification was a result of high water levels in their operating areas, which led to an interruption in gas production, resulting in a significant disruption in NLNG's gas supply," spokesman Andy Odeh said.

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

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

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

NLNG supplies had previously been curtailed by increased oil theft, which has reduced output from what is normally Africa's largest exporter. According to Refinitiv, NLNG exported about 18 cargoes in September.

Nigeria relies on fossil fuel exports for 90 percent of its foreign exchange and about half of its budget. Crude oil exports fell below one million barrels per day in August, the lowest level since the 1980s. This is due to theft, which exceeds 80 percent for some pipelines.

The crushing cost of fuel subsidies has also prevented Africa's most populous country from benefiting from this year's rise in oil prices.

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