Nigeria’s First FLNG Project Expected to Move Forward in 2024

UTM Offshore, a prominent entity in the energy sector, is actively pursuing advancements in Nigeria’s inaugural FLNG (Floating Liquefied Natural Gas) project. Julius Rone, the company’s managing director and chief executive, recently conveyed their intention to formalize the investment decision by the first quarter of 2024. This proclamation signifies a slight postponement, as UTM had previously aimed to reach this determination by the year’s end.

Nonetheless, UTM has made substantial headway in the FLNG development, solidifying a shareholders agreement for the project with the Nigerian National Petroleum Company (NNPC) and the Delta State government this year. Per the agreement, UTM will hold 78 percent equity, while NNPC and the Delta State government will possess 20 percent and 8 percent, respectively.

Regarding production capacity, the FLNG facility is slated to yield 1.81 to 2.72 million metric tonnes per annum (mtpa) of gas, in addition to over 300,000 metric tonnes of LPG (cooking gas) earmarked for the domestic market. This represents a notable increase from the initial capacity projection of 1.5 mtpa. Furthermore, plans are in place to install a second FLNG offshore Nigeria, underscoring the company’s ambitious growth strategy in the region.

The project’s development is underway, with UTM awarding the Front-End Engineering and Design (FEED) contract to industry-leading firms Technip Energies and JGC. Additionally, UTM has enlisted US-based KBR as the owner’s engineer, leveraging their expertise for the project.

The FLNG is designed to process associated gas from the Yoho field, thereby mitigating carbon emissions and unlocking additional reserves for both domestic and international markets. Situated in Oil Mining Lease (OML) 104 offshore Nigeria, the Yoho field is a joint venture between ExxonMobil’s unit MPN and NNPC, holding 40% and 60% stakes, respectively.

Looking ahead, UTM aims to award the engineering, procurement, construction, installation, and commissioning (EPCIC) contract to Technip Energies and JGC in May of the following year. This entails subcontracting a shipbuilder in China to fabricate the hull and integrate topsides, with China Merchants Heavy Industry and Cosco Shipping (Qidong) Offshore reportedly vying for the contract.

To fortify the project’s financial structure, UTM collaborated with the African Export-Import Bank (Afreximbank) to secure funding of up to $5 billion, with approximately $2 billion earmarked for the project’s initial phase. This financial alliance underscores the substantial investment and dedication needed for the successful realization of Nigeria’s first FLNG project.

In conclusion, UTM’s initiatives to advance the FLNG project in Nigeria signify a pivotal milestone in the country’s energy sector. With notable progress achieved and significant milestones on the horizon in 2024, the project’s prospects appear promising.