A London court has ruled that Nigeria LNG Limited (NLNG), the countrys largest gas exporter, must pay a hefty sum of $380 million to global commodity trading giants, Vitol and Glencore, over its failure to deliver contracted cargoes.

The ruling, delivered on Monday, stems from a protracted legal battle over contractual breaches and supply disruptions dating back to 2020.

The London Court of International Arbitration found NLNG, a joint venture involving the Nigerian National Petroleum Company (NNPC), Shell, TotalEnergies, and Eni, in breach of contract for failing to fulfil its obligations.

According to a report by Reuters, the case revolves around a deal between NLNG and Taleveras, a trading firm that was supposed to receive 19 liquefied natural gas (LNG) cargoes from NLNG between 2020 and 2021.

Taleveras, in turn, had pre-sold some of these cargoes to Vitol and Glencore. However, when NLNG failed to deliver, the two companies took legal action, setting off a chain of litigation.

After years of legal proceedings, the court ruled that NLNG must pay approximately $260 million to Vitol and $120 million to Glencore.

The companys appeal against the judgment was dismissed, leaving it with no option but to comply with the financial penalty.

The ruling has once again brought to light the operational challenges plaguing Nigerias gas sector, particularly at the Bonny Island LNG export facility, where force majeure declarations and supply shortfalls have significantly affected output.

The disruptions have seen NLNG struggle to meet contractual obligations, a situation worsened by government policies prioritising domestic gas supply.

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In response to the ruling, NLNG stated that it was reviewing the judgment but declined to make further comments.

Meanwhile, Shell, Eni, and TotalEnergies have also refrained from making public statements on the matter.

The development comes at a critical time for Nigerias gas industry, which has been grappling with declining revenues and supply chain constraints.

Official data indicate that NLNGs revenue fell by 23.14 per cent in 2023, dropping to $5.84 billion from $7.59 billion the previous year.

The company attributed the decline to feedstock shortages and disruptions in gas supply.

Industry analysts note that the case reflects broader trends in the global energy market, where contractual disputes between producers and traders have become increasingly common.

Gas supply shortages, price fluctuations, and geopolitical tensions have further complicated the landscape, making it difficult for firms like NLNG to navigate their export commitments.

Sodiq Lawal is a passionate and dedicated journalist with a knack for uncovering captivating stories in the bustling metropolis of Osun State and Nigeria at large. He has a versatile reporting style, covering a wide range of topics, from politics , campus, and social issues to arts and culture, seeking impact in all facets of the society.

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