By Patience Chat Moses
Nigeria’s UTM Offshore Limited has received approval to Construct the West African nation’s first-ever floating liquefied natural gas facility — five years after it was first announced.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) issued the license to the Abuja-based company for an LNG project estimated at 2.8 million metric tons per year.
The license was signed and issued by the Authority Chief Executive Officer of the Nigeria Midstream and Downstream Regulatory Authority (NMDPRA), Farouk Ahmed at the Authority’s headquarters in Abuja, under the supervision of NMDPRA’s Legal Adviser, Folorunsho Joseph.
“This marks a significant milestone and aligns with the gas expansion ambitions of the government,” Farouk Ahmed, head of the regulatory agency, said while giving his remarks at the ceremony.
He added that Nigeria, Africa’s largest crude producer, is trying to pivot away from its reliance on oil by promoting investment in the country’s largely unexploited 200 trillion cubic feet of proven gas reserves. Most of the nation’s gas output is currently either flared or re-injected into wells and that UTM was initially granted a license to build a 1.2 million tons per annum facility in 2019, but it was upgraded to 2.8 million tons “because of increased LNG demand in the market.
The plant, located in offshore Akwa Ibom state in the oil-rich Niger Delta, is expected to be commissioned in 2028, with first-gas a year later. It will produce LNG, petroleum gas and condensate.
The company had signed a memorandum of understanding with the African Export-Import Bank in 2021 to raise as much as $2 billion for the project, and the bank has received a first-level approval to invest $350 million in the project.
The Minister of state for petroleum resources (Gas) Ekperipe Expo who graced the event said the floating LNG project is in line with the President’s Decade of Gas initiative of 2030.
He commended the Chief Executive Officer of UTM Offshore, Juluis Rone for the bold step taken to start the project at first.
He noted that the license was issued after the Federal Government saw UTM Offshore’s commitment in developing the nations gas sector adding that this will take Nigeria back to gaining her position as Africa’s leading economy.
While giving his remarks, the Chief Executive Officer (CEO) of UTM Offshore, Julius Rone revealed that a final investment decision is expected in the last quarter of the year.
He explained that the company had also concluded contracts with Japan’s JGC Corp. and Houston-based KBR Inc. to design the project, with Vitol Group having an off-take agreement for LNG produced at the facility and that last year, the company signed a deal that saw state-owned Nigerian National Petroleum Co. Ltd. take a 20% stake in the project.
UTM had proposed getting feedstock for the project at an offshore oil field that’s operated by Exxon Mobil Corp. in partnership with the NNPC, but that asset is in the process of being sold to Seplat, which has ambitions of its own to develop its vast gas reserves. Rone said talks are progressing with to participate in the midstream arm of the project.
“It is a stranded gas that can only be monetized through a floating LNG technology.
” It will only add to Seplat’s balance sheet to say they have a ready-made buyer for a gas they have not developed,” he said.
Rone further assured Nigerians that the project which is in line with the president’s Decade of Gas initiative will be delivered within the expected timeframe with considerations to budget terms.
He assured that his dedicated team of professionals will work while complying to industry standards of excellence and adherence to safety.
As the project moves to it’s engineering stage to procurement stage, Rone expressed gratitude to President Bola Tinubu for his support and desire to see the project come to fruition.
Also in attendance was the Executive Director of Hydrocarbon Processing Plants, Installations and Transportation Infrastructure, Mr Francis Ogaree who said that the issuance of the license will encourage other indigenous gas companies to venture into gas production and this will trigger an expansion in the gas production, utilization and distribution capacity of the country by 2028.
