A London court ruling against Nigeria’s natural gas company, Nigerian Liquefied Natural Gas (NLNG), has resulted in a significant financial setback. The court ordered the company to pay $380 million to Vitol and Glencore due to a contract breach, which will impact Nigeria’s expected gas earnings at a time when the government is already seeking loans to finance its budget.
NLNG, a joint venture of four major oil companies, is partially owned by the Nigerian National Petroleum Company (NNPC), which holds a 49% stake. Shell owns 25.6%, while Total and ENI hold 15% and 10.4%, respectively. Of the $380 million judgment debt, Nigeria is expected to absorb a loss of approximately $186.2 million. This comes as the country faces a budget deficit of more than 40% and is in urgent need of financing.
Since its establishment in 1989, NLNG has been one of Nigeria’s top-performing government-owned companies, having paid over $21 billion in dividends to the Nigerian government. However, the legal battle stems from a 2020-2021 dispute over the non-delivery of 19 liquefied natural gas cargoes, which NLNG had failed to supply.
In the case, trading firm Taleveras had sold the cargoes to Vitol and Glencore, expecting delivery from NLNG. After the cargoes were not delivered, Vitol and Glencore sued Taleveras, which then sued NLNG and won. Despite an appeal, NLNG lost the case, and the court’s final ruling mandates a payment of $260 million to Vitol and $120 million to Glencore.
NLNG’s revenue has been on the decline in recent years due to reduced investments in gas and ongoing supply challenges. In 2022, the company paid $1.1 billion in dividends to the Nigerian government, but this figure dropped to $849.3 million in 2023—a 29.5% decline.
With the latest court ruling, experts predict further reductions in NLNG’s dividends. Energy expert Dan Kunle explains that the judgment debt will likely be paid through direct deductions from dividends or future cargoes. He emphasizes the need for more investment in the gas sector to prevent further setbacks. “In the past three years, NLNG has declared force majeure, and its exports have dropped by 40%,” Kunle said.
A government official, however, reassured that the financial impact on the government will be gradual, as the debt will be paid in installments over time, either in cash or through future cargoes.
Despite the setback, the spokesperson for NLNG did not respond to requests for further comment.
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