Nigeria LNG Challenges Arbitral Award Despite Contractual Binding Provision


Nigeria LNG is currently contesting the enforceability of an arbitral award’s demand order issued by a UK arbitration panel, despite a contractual provision that deems the award final and binding. This dispute stems from Nigeria LNG’s alleged breach of contract for failing to deliver 19 cargoes under a January 2020 agreement, scheduled for delivery between October 2020 and October 2021.

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The arbitration tribunal, comprising Mr John Beechey CBE, Mr J William Rowley KC, and Mr Nevil Phillips, ruled that Nigeria LNG breached its contract obligations.

In a related development, Shell Plc has escalated its dispute with Venture Global LNG (VGL), a US-based LNG exporter, for breaching a supply contract. Shell accuses VGL of limiting supply access while exporting over $18 billion in LNG, causing significant losses for Shell and other European companies.

Shell’s Chief Executive, Wael Sawan, expressed disappointment with VGL’s actions, highlighting potential damage to confidence in US LNG supplies due to VGL’s preference for spot market sales over contractual commitments.

Amidst these contract disputes, Nigeria LNG is pursuing expansion plans, including the Train 7 project, aimed at increasing capacity by 35% from the current 22 Million Tonnes Per Annum (MTPA). However, the impact of supply breaches on future developments remains uncertain, as contractual sanctity is vital for industry confidence and financing.

Oil and gas industry experts have commended President Tinubu’s Executive Orders on Oil and Gas reforms, emphasizing the importance of contract sanctity in fostering investment and industry growth. Nigeria LNG, a significant player in the industry, is predominantly owned by Shell, Total, and Eni, with the Federal Government holding a 49% stake.

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