Nigeria’s First FLNG Project: UTM’s Chief Expects FID by Q1 2024
UTM Offshore is preparing to make a final investment decision (FID) on Nigeria’s inaugural Floating Liquefied Natural Gas (FLNG) project in the first quarter of 2024, with plans to approve the Engineering, Procurement, Construction, Installation, and Commissioning (EPCIC) contract in the second quarter. Julius Rone, the managing director and chief executive of UTM, provided this timeline to LNG Prime during a recent interview.
The FID timeline has experienced a slight delay since July, when Rone initially projected that UTM would aim for the FID by the end of this year. Nevertheless, the company has been making strides in advancing the FLNG development throughout the year.
One of the significant accomplishments includes the signing of a shareholders agreement (SHA) for the FLNG project with Nigeria’s state-owned Nigerian National Petroleum Company (NNPC) and the Delta State government. As per the agreement, UTM holds 78 percent equity of the FLNG project, NNPC owns 20 percent, and the Delta State government owns 8 percent.
The FLNG facility is anticipated to have a substantial output, ranging from 1.81 to 2.72 million metric tonnes per annum (mtpa) of gas. Moreover, it will dedicate over 300,000 metric tonnes of Liquefied Petroleum Gas (LPG), commonly known as cooking gas, to the domestic market. This represents a significant surge in the project’s capacity, as it exceeds the previously stated capacity of 1.5 mtpa. UTM also has intentions to install a second FLNG offshore Nigeria.
When asked about whether the enhanced capacity estimation incorporates two production units, Rone clarified that this capacity is specifically planned for a single FLNG. This capacity boost is the result of the comprehensive front-end engineering and design (FEED) work completed by France’s Technip Energies and Japan’s JGC, following UTM’s awarding of the FEED contract to the two companies in November 2022. Additionally, UTM enlisted the services of US-based KBR as the owner’s engineer.
The FLNG will play a critical role in processing associated gas from the Yoho field, which is presently being flared. By doing so, it aims to reduce carbon emissions and harness additional reserves for both domestic and global markets. The Yoho field, situated in Oil Mining Lease (OML) 104 offshore Nigeria, is owned by ExxonMobil’s unit MPN (40 percent interest) and NNPC (60 percent stake).
Looking ahead, UTM has set sights on awarding the EPCIC contract to Technip Energies and JGC in May of next year. However, Rone refrained from disclosing the financial details of the impending deal. Post these proceedings, the two firms will subcontract a shipbuilder in China to construct the hull and integrate topsides.
When it comes to financing, UTM partnered with the African Export-Import Bank (Afreximbank) last year to secure up to $5 billion for the development of Nigeria’s pioneering floating LNG production unit. This funding encompasses approximately $2 billion for the project’s initial phase. In June this year, UTM and Afreximbank solidified their collaboration by signing a project preparation facility to advance the project. As part of this agreement, Afreximbank committed to funding feasibility studies such as geotechnical studies and others crucial for FID and financial closure.
