London — Trading houses Vitol and Glencore will receive $380m in compensation after their gas supplier, trading firm Taleveras, won a legal battle in a London court against Nigeria’s sole liquefied natural gas (LNG) producer for non-delivery of LNG.
The case, heard in London’s High Court and Court of Appeal, is the latest in a string of lawsuits brought by buyers against sellers and producers for non-delivery of LNG cargoes.
Gas prices rallied from lows plumbed during the Covid-19 pandemic when Russia invaded Ukraine in February 2022.
Taleveras sued Nigerian venture NLNG, which involves Shell, TotalEnergies and Eni as partners, four years ago. These three companies are minority shareholders in NLNG, while the Nigerian state-owned oil company has 49%. Last week, NLNG’s appeal was rejected, according to an official video of court proceedings.
A full written judgment is due to be released in the next few weeks.
NLNG runs Nigeria’s biggest LNG plant, which provides about 5% of global supply. The company said only that it was reviewing the ruling. Shell and Eni declined to comment, while TotalEnergies did not respond to a request for comment.
Court proceedings focused on 19 cargoes that NLNG had been due to deliver to Taleveras in 2020-21. Taleveras had pre-sold some of these LNG cargoes to Vitol and Glencore, court documents show.
The trading houses took legal action against Taleveras for non-delivery, leading to a chain of litigation. The lost appeal means NLNG will need to pay Vitol about $260m and about $120m to Glencore, the documents said.
Vitol and Glencore did not respond to requests for comment. It was not clear how much Taleveras would receive on top of $380m. Taleveras declined to comment.
European benchmark gas prices swung between €3.63 per megawatt-hour in 2020 as demand fell because of the pandemic and €311 per MWh in 2022 after the invasion of Ukraine disrupted supplies to Europe.
When prices soared, some producers cut supply under long-term deals and sold those volumes at higher prices on the spot market instead, triggering a wave of complaints about legality of such actions.
In one such case, Shell and BP pursued arbitration against Venture Global LNG, a US gas exporter, for failing to supply contracted cargoes. Venture Global cited technical issues at its LNG facilities as the reason for delayed deliveries.
In the case of Taleveras versus NLNG, NLNG's reasons for non-delivery were unclear.
Taleveras was founded in 2004 by Igho Sanomi, one of Nigeria’s independent energy traders. The company is now based in Dubai.
Reuters
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