Nigeria’s UTM Offshore Ltd. Secures Approval to Build Country’s First Floating LNG Facility
Nigeria’s push for gas expansion has taken a significant step forward with the approval of UTM Offshore Ltd. to construct the country’s first floating liquefied natural gas (LNG) facility. The Nigerian Midstream and Downstream Petroleum Regulatory Authority granted the license-to-construct for the project, which is expected to produce 2.8 million metric tons of LNG per year.
The facility, located in offshore Akwa Ibom state in the Niger Delta, will be designed to produce LNG, petroleum gas, and condensate. The project is a significant milestone for Nigeria, which aims to tap its vast gas reserves, currently estimated at 206 trillion cubic feet. The majority of these reserves are currently flared or re-injected into wells, making this project a crucial step towards monetizing this valuable resource.
The project was initially approved for a 1.2 million tons per annum facility in 2019, but was upgraded to 2.8 million tons due to increased demand for LNG in the market. The facility is expected to be inaugurated in 2028, with first-gas production scheduled for 2029.
UTM Offshore Ltd. has already secured significant financing for the project, having signed a memorandum of understanding with the African Export-Import Bank in 2021 to raise up to $2 billion. The bank has received a first-level approval to invest $350 million in the project.
The company has also concluded contracts with JGC Corp. of Japan and KBR Inc. of Houston to design the project, while Vitol Group has an off-take agreement for LNG produced at the facility. Additionally, state-owned Nigerian National Petroleum Co. Ltd. has taken a 20% stake in the project.
UTM Offshore Ltd. has also secured feedstock for the project from an offshore oil field operated by Exxon Mobil Corp. in partnership with Nigerian National Petroleum Co. Ltd. However, the asset is being sold to Seplat, which plans to develop its own gas reserves.
“This floating LNG technology is the only way to monetize this stranded gas,” said Julius Rone, CEO of UTM Offshore Ltd. “It will add significant value to Seplat’s balance sheet, as they will have a ready-made buyer for their gas reserves.”
The approval of this project marks a significant milestone for Nigeria’s gas expansion ambitions and is expected to have a positive impact on the country’s energy sector.
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