Nigeria LNG Limited (NLNG) faces arbitration hurdles as Shell files claims against Venture Global LNG over undelivered cargoes

by MMC
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Shell Plc has filed complaints with US regulators against Venture Global LNG (VGL), the LNG exporter, for breach of contract for the supply of goods. This follows VGL’s restriction of liquefied natural gas (LNG) supplies to the global oil giant. Meanwhile, tNigeria LNG Ltd (NLNG) would be in a similar supply conflict and is currently in a UK High Court to challenge order seeking arbitration award issued by arbitration panel.

An industry source, who requested anonymity, highlighted similarities between the disputes involving VGL. and NLNG, attributing the challenge to the unexpected boom in the LNG market. “The reason for this increase in litigation could be linked to the unexpected evolution of losses towards highly profitable companies. margins, of up to $90 million per cargo, at the start of the Russian-Ukrainian conflict, post-Covid market recovery and huge demand in Asian and European markets, it is considered a golden age for LNG cargo,” he said. “This situation could have led to numerous agreement failures, with the main LNG suppliers choosing to maintain higher margins at the risk of lengthy litigation.

Shell has escalated its dispute with VGL after accusing the LNG producer of restricting access to its supply and other customers while exporting more than $18 billion worth of super-refrigerated gas. In a letter sent to the Federal Energy Regulatory Commission, Shell asked the commission to compel VGL will release plant commissioning data to clarify the cause of the delay in commercial operations. Shell and other European companies say they have a contract with VGL but have not sent their gas shipments under long-term contracts, but VGL has been selling gas from the plant for more than a year to others, which costs it Contracted customers lost billions of dollars in profits.

NLNG, in its case, was found to be in breach of contract by failing to deliver 19 cargoes under a contract which he executed in January 2020. The cargoes, which were to be delivered between October 2020 and October 2021, were not provided. In pleadings presented by NLNG in detail of its claims to the High Court of Justice of England and Wales Commercial Court, the breach was confirmed by a final arbitration award dated January 30, 2023. NLNG Ltd is largely owned by Shell, Total and Eni, with the Nigerian federation controlling a 49 percent stake.

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