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FG Grants First License to Construct Nigeria’s Floating LNG Plant

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UTM Offshore Ltd. has been granted the first-ever license to construct a floating liquefied natural gas (LNG) facility in the country.


The Nigerian Midstream and Downstream Petroleum Regulatory Authority issued the license on September 7, 2024, marking a step towards harnessing the nation's vast gas reserves.


The floating LNG plant, set to be located offshore in Akwa Ibom state within the oil-rich Niger Delta, is projected to produce 2.8 million metric tons of LNG annually.


This initiative aligns with Nigeria's broader goal to tap into its 206 trillion cubic feet of proven gas reserves, much of which are currently flared or re-injected into wells. Farouk Ahmed, the Authority Chief Executive, emphasized the project's importance, stating, "This marks a milestone and aligns with the gas expansion ambitions of the government." Initially, UTM was granted a license in 2019 to build a smaller facility with a capacity of 1.2 million tons per annum. However, due to increased market demand for LNG, the project was upgraded to its current scale.


The plant is expected to be inaugurated in 2028, with the first gas production anticipated a year later. It will not only produce LNG but also petroleum gas and condensate. Julius Rone, CEO of UTM Offshore Ltd., highlighted the financial and strategic partnerships that have been secured for the project.


In 2021, the company signed a memorandum of understanding with the African Export-Import Bank to raise up to $2 billion, with the bank already approving an initial investment of $350 million.


Additionally, design contracts have been finalized with Japan’s JGC Corp. and Houston-based KBR Inc., while Vitol Group has an off-take agreement for the LNG produced at the facility. However, the project faces potential challenges.


The proposed feedstock for the plant is sourced from an offshore oil field operated by Exxon Mobil Corp. in partnership with the Nigerian National Petroleum Co. Ltd. (NNPC).


This asset is currently being sold to Seplat, a company with its own ambitious gas development plans. Rone commented on this, saying, “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.”

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