London court fines Nigeria LNG $380m over breach of contract
A London court has ruled that Nigeria LNG Limited must pay $380 million to global commodity traders Vitol and Glencore over undelivered cargoes.
The ruling, announced on February 25, 2025, is the result of a long-standing dispute concerning contractual obligations and supply disruptions.
According to a report by Reuters, the London Court of International Arbitration found Nigeria LNG, a joint venture between the Nigerian National Petroleum Company Limited (NNPC Limited), Shell, TotalEnergies, and Eni, in breach of contract for failing to deliver LNG cargoes to Vitol and Glencore.
The dispute began with a supply contract between NLNG and trading firm Taleveras, which was supposed to receive 19 LNG cargoes from NLNG between 2020 and 2021. However, the undelivered cargoes were part of long-term supply agreements disrupted by operational issues and force majeure declarations at Nigeria’s Bonny Island LNG export facility.
Taleveras had pre-sold some of these shipments to Vitol and Glencore, but when NLNG failed to deliver, the two companies sued Taleveras, triggering a series of legal actions.
The case was heard in London’s High Court and Court of Appeal, and last week, the court rejected NLNG’s appeal, confirming that the company must pay approximately $260 million to Vitol and $120 million to Glencore.
NLNG stated it was reviewing the ruling but declined further comment. Shell, Eni, and TotalEnergies also chose not to comment.
The court proceedings focused on the 19 cargoes NLNG was scheduled to deliver to Taleveras in 2020-2021. Taleveras had pre-sold some of these cargoes to Vitol and Glencore, according to court documents.
Vitol and Glencore took legal action against Taleveras for non-delivery, which led to further litigation. The lost appeal means NLNG will now be required to pay Vitol around $260 million and approximately $120 million to Glencore.
Vitol and Glencore did not respond to requests for comment. It remains unclear how much Taleveras will receive in addition to the $380 million. Taleveras declined to comment.
Reuters noted that this lawsuit is part of a broader trend in the energy market, with buyers taking legal action against producers for failing to honor contracts. Gas prices, which had plunged during the COVID-19 pandemic, surged dramatically following Russia’s invasion of Ukraine in 2022.
European gas prices dropped to €3.63 ($4.14) per megawatt-hour in 2020 due to low demand during the pandemic but soared to €311 ($328) per MWh in 2022 as the invasion disrupted supplies.
Operational disruptions and the redirection of gas supplies to the domestic market led to a 23% decline in NLNG’s revenue in 2023.
As the country’s largest gas exporter, NLNG saw its revenue fall for the first time in three years, mainly due to a shortage of feedstock that limited output. Revenue dropped by 23.14% to $5.84 billion in 2023, compared to $7.59 billion the previous year, an eight-year high, according to official data analyzed by The Africa Report.
