Nigeria Liquefied Natural Gas Limited’s (NLNG) gas supply has suffered a major setback as widespread Pipeline vandalism causes an astounding 80% reduction, a devastating blow to the country’s liquefied natural gas sector. This crippling setback comes at a time when demand for Liquefied Natural Gas (LNG) is skyrocketing and threatens the nation’s Export potential, economic stability, and international energy obligations. NLNG, the country’s sole LNG producer, has been forced to operate only two out of its six production trains at its Bonny Island facility due to the sharp drop in feed gas supply.
According to a Bloomberg report, the company’s current gas input is only one-fifth of the plant’s needed capacity, endangering planned shipments and exacerbating the nation’s economic woes. The worrying Disruption stems from persistent gas pipeline sabotage in the Niger Delta, where the nation’s oil and gas Infrastructure has long been beset by criminal syndicates and militant organizations. During the Nigeria International Energy Summit, NLNG’s managing director, Philip Mshelbila, expressed deep frustration, warning that pipeline vandalism is increasing at an alarming rate.
Global and domestic impacts of the supply disruption.
He called for immediate action to reevaluate Nigeria’s energy Security framework, emphasizing that the company’s capacity to meet global demand is being severely hampered by the continued attacks. Mshelbila cautioned that the gas industry is being driven to the verge of collapse due to the loss of vital infrastructure, which would have long-term effects on both home and foreign markets. Global energy markets are already feeling the effects of the crisis. According to Bloomberg data, Nigeria’s LNG shipments fell 40% in February when compared with January.
For Europe, which has grown more dependent on Nigerian LNG to make up for decreased Russian gas supplies since the conflict in Ukraine, the shortage is especially worrisome. Nearly half of Nigeria’s LNG exports in 2024 went to Asia, with a third going to Europe and the remainder going to the Americas and the Middle East. Global gas markets may become even more constrained as a result of the supply disruption, which might raise prices and exacerbate energy instability. Domestically, the consequences of the crisis for the country’s Economy are dire.
NLNG’s financial contribution and recent declines.
Each year, NLNG contributes billions of dollars to the national treasury, making it one of the most important sources of income for the nation. Through its ownership of shares in the Nigerian National Petroleum Company (NNPC), the company has paid the federal government almost $15 billion for feed gas since its founding. Through its NNPC stake, the federal government has received over $18 billion in dividends. However, the company’s Revenue dropped by almost 25% to $5.85 billion in 2023—the first decline in three years—due to a declining supply of feed gas.
In addition to undermining Nigeria’s economic base, pipeline sabotage is seriously harming the environment and escalating unrest in the Niger Delta. For decades, Nigeria’s oil and gas industries have been beset by frequent attacks, which have compelled large operators like Shell and Total to reduce output. Now, as Nigeria shifts its focus from dwindling oil earnings to capitalizing on expanding global gas demand, the increasing frequency of vandalism is posing a serious threat to the country’s aspirations to become a major LNG exporter.
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With over 200 trillion cubic feet of proven natural gas reserves in Africa, Nigeria has the greatest in the continent, positioning it as a potential LNG powerhouse globally. These hopes could be derailed, though, by the continuous sabotage of the infrastructure. According to Sophia Horsfall, General Manager for External Relations and Sustainable Development at NLNG, ongoing pipeline vandalism will jeopardize Nigeria’s long-term economic stability. The federal government’s ambitions to use LNG export earnings to Finance its ambitious trillions of Naira 2025 budget have also been clouded by the crisis.