In a significant development for Nigeria’s energy sector, Nigerian Liquefied Natural Gas (NLNG) is poised to increase its gas supply by up to 12% through a new deal with Seplat Energy, a leading indigenous oil and gas company.
This agreement comes at a critical time for NLNG, a joint venture between the Nigerian government, Shell Plc, TotalEnergies SE, and Eni SpA, as its operations have been hampered by rampant fuel theft and pipeline vandalism.
However, the news is tempered by a simultaneous crisis in the Niger Delta, where Renaissance Africa Energy Company Limited has suspended oil shipments due to a spill in its Okordia-Rumuekpe pipeline.
Seplat Energy, fresh off its acquisition of Mobil Producing Nigeria Unlimited (MPNU) from Exxon Mobil Corporation, has emerged as a key player in addressing NLNG’s supply constraints.
According to Effiong Okon, Managing Director of ANOH Gas Processing Company (AGPC), a Seplat subsidiary, the company will deliver over 150,000 tons of gas per month to NLNG’s plant under a preliminary agreement.
This volume represents a 12% increase over last year’s monthly average, offering a much-needed boost to the Bonny Island-based facility.
The deal marks only the second time NLNG has sourced gas from a third party, highlighting the severity of its supply challenges. Gangs tapping pipelines have caused gas deliveries to plummet, threatening the plant’s output and Nigeria’s position as a major LNG exporter.
The agreement with Seplat, expected to take effect in the third quarter, is a “strategic convergence of need and opportunity,” according to Katlong Alex, an analyst at the African Energy Council. For NLNG, it’s a chance to stabilize operations; for Seplat, it’s an opportunity to monetize its $700 million ANOH gas plant, which has been idle due to delays in a critical east-west pipeline.
Seplat’s gas production has surged by 50% since the MPNU acquisition, positioning it to meet NLNG’s needs. However, the arrangement is described as “short-term,” pending the completion of the delayed pipeline infrastructure.
Both parties are now finalizing technical and commercial details to ensure a seamless rollout. NLNG, which did not respond to Bloomberg’s request for comment, will likely view this as a critical step toward restoring operational reliability.
WHAT YOU SHOULD KNOW
While the NLNG deal signals progress, Nigeria’s oil industry faces ongoing challenges, as evidenced by a fresh crisis in the Niger Delta. Renaissance Africa Energy Company Limited, which operates a former Shell onshore subsidiary, has halted oil shipments through its Okordia-Rumuekpe pipeline in Rivers State following a spill detected on Monday.
The Seplat-NLNG deal and the Renaissance spill encapsulate the dual realities of Nigeria’s energy sector: immense potential tempered by systemic challenges. The agreement with Seplat offers a glimmer of hope for NLNG, which has struggled to maintain consistent gas supplies amid security and infrastructure woes.
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