Nigeria LNG Limited (NLNG) has suffered a major legal blow in the United Kingdom after the Court of Appeal in London rejected its claim of non-liability in a high-profile case involving oil trading firm Taleveras. The ruling upheld an earlier decision by the High Court, affirming NLNG’s obligation to indemnify Taleveras for a staggering $380 million payout owed to energy giants Vitol SA and Glencore Energy UK.
The judgment, delivered by the Business and Property Courts of England and Wales, marks a significant setback for Nigeria’s largest liquefied natural gas producer. The court ruled that NLNG must honor the indemnity provision in line with an arbitral tribunal’s earlier declaration—rejecting NLNG’s argument that the indemnity was conditional and required further approvals from other arbitration panels.
At the heart of the legal storm is a failed 2020 gas supply contract between NLNG and Taleveras, a Dubai-based oil firm founded by Nigerian billionaire Charles Igho Sanomi. NLNG, jointly owned by NNPC Limited, Shell, TotalEnergies, and Eni, failed to deliver 19 cargoes of gas as agreed between 2020 and 2021. The shortfall triggered massive financial losses for Taleveras, which had pre-sold the gas to Vitol and Glencore at a time when prices skyrocketed following Russia’s invasion of Ukraine in early 2022.
In January 2023, an arbitral tribunal under the United Nations Commission on International Trade Law awarded $24 million to Taleveras for lost profits and directed NLNG to indemnify the firm against any liabilities in separate proceedings with Vitol and Glencore. By December 2023, another arbitration panel ruled that Taleveras owed $233.3 million in damages to Vitol, leading NLNG to contest the indemnity in court.
NLNG argued that the tribunal’s instructions—especially those in paragraph 607 of the award—were ambiguous and did not explicitly require it to pay unless further approvals were obtained from the Vitol and Glencore arbitration panels. However, the court disagreed.
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Justice Pelling KC had earlier ruled in July 2024 that the indemnity was not contingent on any further approvals. This position was affirmed by the appellate court on Wednesday. Lord Justice Phillips, leading the three-member panel, dismissed NLNG’s argument that the original tribunal misinterpreted its own words. He insisted that the final dispositive section of the arbitral award was “clear, unambiguous and comprehensive,” making the indemnity fully enforceable.
Taleveras had also presented additional documentation—including an amended award from the Vitol arbitration—that confirmed the sums awarded to it fell within the scope of NLNG’s indemnity obligations. NLNG contested the jurisdiction of that panel to make such amendments, but the courts found no merit in its objections.
The unanimous ruling is a significant victory for Taleveras and could have major financial and reputational implications for NLNG. As Nigeria’s flagship LNG company, the enforcement of this indemnity not only impacts its global commercial standing but also raises questions about the reliability of contractual obligations with major international partners.
The London court’s final decision sends a strong message to energy firms operating in the global market: contractual breaches and arbitration awards will be enforced without ambiguity, especially when they involve billions in international trade.
