UTM Offshore signs $5bn MoU with Afreximbank for Nigeria’s first floating LNG (FLNG) project
Nigerian marine and services group, UTM Offshore and the African Export-Import Bank (Afreximbank) have signed a Memorandum of Understanding (MoU) to raise $2 billion, in the first instance, for the development of Nigeria’s first floating liquefied natural gas (FLNG) project. Afreximbank further committed to funding the second phase of the project to the tune of $3 billion.
The MoU to this effect was signed in Abuja on Tuesday by Mr. Julius Rone, Group Managing Director/CEO of UTM Offshore and Dr. Benedict Okey Oramah, President and Chairman of Afreximbank.
The agreement paves the way for additional collaboration between UTM Offshore and the Afreximbank to support a future final investment decision (FID) on UTM’s FLNG project. The company has been studying and conceptualising the development of an FLNG in Nigeria since 2020.
In February 2021, UTM Offshore Limited received a License to Establish (LTE) from Nigeria’s former Department of Petroleum Resources (DPR) for the installation of an FLNG unit on oil mining lease (OML) 104. The block is operated by the joint-venture of Mobil Producing Nigeria (operator, 40%) and the state-owned Nigerian National Petroleum Corp. (NNPC, 60%) and contains the producing Yoho field.
Preparations for the project are now in full swing and benefit from robust global and technical expertise. The pre-Front End Engineering Design (Pre-FEED) contract was awarded to JGC Corporation of Japan in May, while KBR was appointed Owners Engineer. Global energy and commodities trader Vitol has also joined the consortium as off-taker for the LNG.
“The UTM Offshore FLNG will be the first such project developed by an African company on the continent. It will also significantly contribute to the Nigerian government’s agenda of reducing the flaring of associated gas across our industry,” said Julius Rone, Group Managing Director/CEO of UTM Offshore. “As Africa’s FLNG industry grows, we are well positioned to offer attractive project economics by developing shallow water gas reserves, while bringing significant environmental benefits to our industry as a whole,” Mr. Rone said at the brief but colourful MoU signing event at the Transcorp Hilton Hotel, Abuja.
The project notably involves the development and financing of a 1.2m tonnes per annum FLNG facility with a capacity to process 176 MMscfd of natural gas and condensate. The unit would target the processing of associated gas currently flared in order to cut carbon emissions and monetise additional reserves for the domestic and global markets.
At the signing event, the President of Afreximbank, Prof. Benedict Oramah commended Mr. Julius Rone and his team at UTM Offshore Limited for rising up to one of the greatest challenges of this era. “Across the world, nations are evolving climate change goals; Africa has not been able to leverage the abundant opportunities in the continent to help meet the global climate change goals. That is why Afreximbank considers what UTM Offshore is doing, the development of Nigeria’s first FLNG not just unique but laudable. UTM Offshore is helping not just Nigeria but the the whole of Africa to transition to clean energy and in the process, the firm is creating huge employment opportunities for Nigerians. This is a landmark project that Afreximbank takes very seriously,” Prof. Bendict Oramah said.
Beyond financing UTM’s FLNG project to tune of $5billion in two phases, the President of Afreximbank disclosed that the bank would be ready to offer other financial and insurance support services to the the FLNG project. “If this project succeeds, it will create jobs and aid development in Nigeria and even more important, it would prove that Africa has become serious about climate change goals and would further prove that Nigerians can use the abundant potentials in Nigeria to develop Nigeria. Truth is that nobody will develop Nigeria but Nigerians. UTM Offshore Limited, an indigenous company led by Mr. Julius Rone, has shown that it has the capacity to help develop Nigeria. It is within the mandate of Afreximbank to support what UTM is doing in Nigeria,” the Afreximbank President added.
UTM Offshore Limited is pioneering the development of the FLNG facility in collaboration with LNG Investment Management Services (LIMS), a subsidiary of Nigeria National Petroleum Corporation (NNPC). The facility, a newly built vessel, will receive gas feeds from the existing offshore platform at OML 104, treat it to required LNG standard, liquefy the gas, store the LNG and offload to LNG carriers.
According to Mr. Julius Rone, the floating LNG, when fully completed in 2026, shall have an LNG production capacity of 1.2 mmtpa, Turret and Mooring System, Gas pre-treatment modules, LNG production modules, living quarters, self-contained power generation and utilities as well as capacities for LNG storage and offloading.
