Portugal’s Galp Energia Raises Concern After Flood Stops NLNG Operations

Portugal’s oil and gas company Galp Energia has said it may face additional sourcing disruptions after the Nigeria Liquified Natural Gas(NLNG) declared force majeure due to a widespread flooding.

Galp Energia said, in a statement, it had received a notice from Nigeria LNG (NLNG), its main natural gas supplier, about the force majeure but said “no information was provided to support an assessment of potential impacts”.

It said it “may however result in additional sourcing disruptions to Galp”.

The declaration of force majeur could worsen Nigeria’s cash crunch and will curtail global gas supplies as Europe and others struggle to replace Russian exports due to the invasion of Ukraine in February.

Portugal’s environment and energy minister Duarte Cordeiro said last month the southern European nation could face supply problems this winter if Nigeria does not deliver all the LNG it is due to.

Last year, Portugal imported 2.8 billion cubic meters of LNG from Nigeria, or 49.5 per cent of total imports, while the United States was the second-largest supplier with a share of 33.3 per cent.

On Monday, NLNG spokesperson, Andy Odeh, explained that it was forced to take the decision after all of its upstream gas suppliers announced force majeure.

“Force Majeure” is a common contract clause that effectively exempts parties from responsibility or obligation when an extraordinary event or circumstance beyond the parties’ control, such as a war, strike, riot, crime, epidemic, or sudden legal changes, prevents one or both parties from upholding their end of the bargain.

“The notice by the gas suppliers was a result of high floodwater levels in their operational areas, leading to a shut-in of gas production which has caused significant disruption of gas supply to NLNG,” Odeh said.

He detailed that NLNG was working to mitigate the effect of the force majeure.

The declaration might make Nigeria’s already dire economic circumstances even worse.