Nigeria’s energy sector is set to witness a historic development with the recent approval granted to UTM Offshore Ltd. for the construction of the country’s first floating liquefied natural gas (LNG) facility. The license-to-construct was issued by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), marking a significant milestone in the nation’s gas expansion strategy.
The facility, located offshore in Akwa Ibom State within the Niger Delta region, is projected to have an annual production capacity of 2.8 million metric tons. This capacity is an increase from the initial 1.2 million tons per annum that was granted in 2019, reflecting the growing demand for LNG in the global market.
Farouk Ahmed, Chief Executive of the NMDPRA, highlighted the importance of this project in advancing Nigeria’s gas development goals. “This project aligns with our national aspirations to utilize our 206 trillion cubic feet of proven gas reserves, much of which is currently flared or re-injected,” Ahmed stated. The facility is expected to be inaugurated in 2028, with the first gas production anticipated in 2029. It will produce LNG, petroleum gas, and condensate.
UTM Offshore Ltd.’s Chief Executive Officer, Julius Rone, disclosed that the company had already secured substantial financial backing for the project. In 2021, UTM signed a memorandum of understanding with the African Export-Import Bank (Afreximbank) to raise up to $2 billion for the project. Afreximbank has since approved an initial $350 million investment. Additionally, UTM has finalized contracts with Japan’s JGC Corp. and Houston-based KBR Inc. for the project’s design, and the Vitol Group has entered into an off-take agreement for the LNG produced.
Last year, UTM Offshore also solidified a partnership with the state-owned Nigerian National Petroleum Co. Ltd. (NNPC), which has acquired a 20% stake in the project. However, the proposed feedstock for the LNG facility, sourced from an offshore oil field operated by Exxon Mobil Corp. in partnership with NNPC, is currently under negotiation for sale to Seplat, which plans to develop its own gas reserves.
Rone commented on the strategic importance of the project, noting, “The stranded gas can only be monetized effectively through floating LNG technology. This project not only supports our operational goals but also offers Seplat a ready-made buyer for gas that has yet to be developed.”
This development represents a significant step forward in Nigeria’s efforts to leverage its natural gas resources and contribute to the global energy market.
