January 19, 2023/United Capital Research

According to Bloomberg reports, the Nigerian Liquified Natural Gas (NLNG) Limited cancelled several liquefied natural gas shipments citing vandalism on pipelines from gas fields which disrupted production. However, the management of the NLNG reiterated that the company are operating at prime capacity commensurate to the feed gas it is receiving from its gas suppliers.

Data compiled by BloombergNEF revealed that LNG exports declined by c.78.9% y/y to 0.337 metric tonnes in Jan-2023. The recent Fact and Figures report published by the NLNG revealed that although revenues improved by 30.5% y/y to $5.7bn in 2021, revenue levels remain lower than the $6.3bn pre-pandemic levels, despite capital investments increasing 112.8% y/y in the same period. Revenues in FY-2022 are expected to remain moderate, recalling the gas supply issues earlier in the year, noting that in Q4-2022, NLNG declared a force majeure due to flooding that disrupted their activities. In addition, the report cited possible cancellation of scheduled shipments in Feb-2023. These unfortunate events come when energy prices remain elevated, and with N10.5tn, an arduous revenue target the government has set for 2023.

In the short term, downside risks such as pipeline vandalism and delays in the scheduled completion of the Nigerian Liquefied Natural Gas Train-7 Project remain. However, headwinds such as the West African Gas Pipeline Authority (WAGPA) efforts, the deployment of the planned Vessel Tracking Service (VTS), the establishment of the Oil and Gas Investment Promotion office and the potential construction of the Trans Saharan Gas Pipeline could propel growth and improve revenue receipts in the long run.