Nigeria LNG Ordered to Pay $380m in Compensation to Vitol, Glencore After London Court Ruling

A London court has ordered Nigeria LNG (NLNG) to pay $380 million in compensation to global commodity traders Vitol and Glencore after ruling in favor of the two companies in a legal battle over unfulfilled liquefied natural gas (LNG) contracts.

According to a Reuters report citing court documents, the ruling stems from NLNG’s failure to deliver contracted LNG cargoes, a breach that triggered a series of lawsuits culminating in the recent verdict.

The dispute traces back to a supply contract between NLNG and Taleveras, an international trading firm founded by Nigerian businessman Igho Sanomi. Under the agreement, NLNG was supposed to supply Taleveras with 19 LNG cargoes between 2020 and 2021. However, the Nigerian gas company failed to meet its obligations.

Taleveras, which had already pre-sold some of these shipments to Vitol and Glencore, was subsequently sued by the two global traders. This lawsuit triggered a chain of legal actions, ultimately leading to NLNG being held responsible for non-delivery.

After reviewing the case, London’s High Court and Court of Appeal ruled against NLNG, ordering the company to pay approximately $260 million to Vitol and $120 million to Glencore.

The London Court of Appeal last week rejected NLNG’s appeal, upholding the previous ruling and confirming the $380 million compensation.

NLNG, a joint venture involving Nigeria’s state-owned oil company (NNPC) (49%), and minority stakeholders Shell (25.6%), TotalEnergies (15%), and Eni (10.4%), has not officially responded to the ruling.

When contacted by Reuters, NLNG declined to comment, stating that it was still reviewing the judgment.

Meanwhile, Shell and Eni refused to comment, while TotalEnergies did not respond to inquiries regarding the case.

Taleveras, now based in Dubai, also declined to comment on the ruling. It is not clear whether the company itself will receive any financial compensation beyond the $380 million owed to Vitol and Glencore. A full written judgment is expected to be released in the coming weeks.

Rising LNG Market Disputes Post-COVID

The ruling against NLNG is part of a broader trend of legal disputes in the global LNG market, where buyers have sued producers for failing to fulfill supply agreements.

The energy market experienced significant volatility during the COVID-19 pandemic and following Russia’s invasion of Ukraine in 2022. During the pandemic, gas prices plummeted to $4.14 per megawatt-hour (MWh) due to weak demand. However, following Russia’s invasion of Ukraine, European gas prices surged to $328 per MWh, causing chaos in supply chains.

Amid this price surge, several LNG suppliers were accused of diverting contracted cargoes to the spot market, where prices were much higher, instead of honoring long-term contracts.

For instance, Shell and BP sued U.S. LNG exporter Venture Global LNG, alleging that the company failed to supply contracted volumes while selling to the spot market. Venture Global, however, blamed the issue on technical challenges at its facilities.

Implications for NLNG and Nigeria’s Gas Sector

The ruling against NLNG—Nigeria’s sole LNG exporter—raises concerns about contract reliability in the country’s gas sector. The judgment could also impact investor confidence as Nigeria seeks to expand its gas exports amid increasing competition from other LNG-producing nations.

The verdict comes at a time when the Nigerian government is pushing for increased gas production and exports as part of its broader economic strategy under President Bola Tinubu. The government has also been engaging international oil companies (IOCs) to attract fresh investments into the country’s energy sector.

With the London Court of Appeal rejecting NLNG’s appeal, the company may now be left with limited legal options to contest the ruling. A formal response from NLNG is still awaited, and the expected full written judgment could provide more clarity on the case’s broader implications.