A Review of the Nigerian Energy Industry

Nigeria LNG lifts force majeure, restores normal operations

Nigeria LNG tankerYemie ADEOYE

26 July 2013, Port Harcourt –
Nigeria LNG Limited announced today that it has lifted the force majeure declaration made to its buyers and gas suppliers, after it lost all its product export capability due to the blockade of terminal by the Nigerian Maritime Administration and Safety Agency (NIMASA), an agency of the Federal Government of Nigeria responsible for maritime safety and security, on Friday, 21st June 2013.

All incoming and outgoing cargo vessels to the NLNG Bonny Terminal (for LNG and NGL vessels), were stopped, forcing NLNG, as a prudent operator, to significantly reduce production in order to be able to manage the LNG and NGL inventories in the available tankage safely and in an environmentally responsible manner.

The June 21st blockade was the second this year. The first was on May 3 which was lifted upon government’s intervention following which NLNG was directed to pay NIMASA about US$159m in settlement of levies allegedly owed it from October 2009 – May 2013, and to continue paying the NIMASA levies, going forward.

Dissatisfied, NLNG paid US$20m under protest and filed a suit at Federal High Court for determination of the legality of Government’s directive, as well as NIMASA’s claims. The court granted NLNG an interim injunction against the Federal Government and all its agencies (including NIMASA) from charging or collecting the NIMASA levies, or blocking access to NLNG facilities or detaining its vessels, until the determination of the Motion on Notice for interlocutory injunction already filed in the case. NIMASA however proceeded against the court orders with a blockade of the Bonny Channel, denying entry or exit of ships from the NLNG Terminal. When all efforts to have NIMASA obey the court order proved unsuccessful, the court varied the injunction to enable NLNG pay NIMASA, still under protest, on the 12th of July 2013, without prejudice to the continuation of the substantive suit. NLNG thereafter made payment, and NIMASA eventually removed the physical blockade by mid day of 13th July 2013.

The substantive suit was adjourned to Thursday 19th September 2013. NLNG as a law abiding corporate citizen will be guided by the outcome of the judicial process and expects that other parties will do same.

Following the removal of the blockade, NLNG immediately commenced activities to restore normal operations, and has since been increasing the production levels, in a gradual manner as necessitated by plant design and safe operating procedures.

As at today, the 6-Train NLNG Bonny complex finally reached its normal operating capacity such that export operations can be declared as being fully normalised. Consequently, the company has declared the current FM lifted to both buyers and gas suppliers.

Nigeria LNG Limited, a major exporter of liquefied natural gas and natural gas liquids, is a Nigerian Joint Venture company whose shareholders are the Nigerian National Petroleum Corporation (49%), Shell (25.6%), Total LNG Nigeria Limited (15%) and ENI International (N.A.) S.a.r.l (10.4%).

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