Vitol and Glencore, two major commodity trading houses, will receive $380m in compensation after their gas supplier, Taleveras, won a case against Nigeria LNG (NLNG) in a London court.
NLNG, a joint venture involving Shell, TotalEnergies and Eni as key partners, is Nigeria's primary liquefied natural gas (LNG) producer.
Taleveras sued NLNG for non-delivery of agreed cargoes four years ago, reported Reuters, citing court documents.
The legal dispute arose after Taleveras pre-sold some of the cargoes to Vitol and Glencore. When the cargoes were not delivered, this led to litigation.
As a result of the lost appeal, NLNG is now obliged to pay approximately $260m to Vitol and around $120m to Glencore.
The proceedings centred on 19 LNG cargoes that NLNG was contracted to supply to Taleveras between 2020 and 2021.
The reasons for NLNG's delivery delays to Taleveras have not been disclosed.
Despite NLNG's recent appeal, the court upheld the initial ruling, as evidenced by an official video of the court proceedings. A detailed written judgment is expected in the forthcoming weeks, the report said.
NLNG, responsible for around 5% of the global LNG supply, has stated it is currently reviewing the court's decision and has refrained from further comment.
Shell, Eni and TotalEnergies have also chosen not to comment on the matter.
Both Vitol and Glencore have not provided comment, and the exact amount Taleveras will receive in addition to the $380m remains unclear, the report added.
The case is part of a series of legal disputes over non-delivery of gas cargoes, a situation exacerbated by market volatility following the Covid pandemic and the Russian invasion of Ukraine in February 2022.
The European gas market has experienced price fluctuations ranging from €3.63 ($3.80) per megawatt-hour (MWh) in 2020 to a peak of €311/MWh in 2022.
Some producers have been accused of diverting supplies from long-term contracts to the spot market to capitalise on higher prices, leading to numerous legal challenges regarding the legality of such actions.
In a similar dispute, Shell and BP sought arbitration against US gas exporter Venture Global LNG for failing to meet contractual supply obligations, which Venture Global attributed to technical issues at its LNG facilities.
