An indigenous oil company, UTM Offshore, will sign a front-end engineering design (FEED) agreement for Nigeria’s first floating liquefied natural gas (FLNG) facility today.
According to reports, UTM Offshore, Technip Energies, KBR, and JGC Corporation will sign the FEED agreement in London.
The development will automatically move to the implementation stage after the agreement is signed.
The African Export-Import Bank (Afreximbank) announced in July 2022 that it had signed an agreement with UTM Offshore for the financing of a project preparation facility. Activities that are meant to advance the company’s FLNG project toward bankability will be partially funded by Afreximbank.
Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), formerly the Department of Petroleum Resources (DPR), granted UTM Offshore a license in February 2021 to build Nigeria’s first floating liquefied natural gas (FLNG) production plant.
African LNG market growth factors
African natural gas consumption is predicted by the International Energy Agency (IEA) to increase by 3.3% annually on average, reaching almost 195 billion cubic meters (bcm) in 2025. Algeria, Egypt, and Nigeria’s industrial and energy needs are the main forces behind this growth.
According to the IEA’s 2022 African Energy Outlook, using natural gas will be necessary to increase access to modern energy in Africa. Natural gas needs to be extensively invested in areas like clean cooking, electrification, and industrialization. The forecast reads:
“Achieving full access to modern energy in Africa by 2030 would require an investment of $25 billion per year – equal to around a quarter of total energy investment in Africa before the pandemic – but just slightly above 1% of total energy investment globally and comparable to the cost of just one large LNG terminal investment.
“Almost half of this investment would be in just five countries – Democratic Republic of Congo (DRC), Ethiopia, Nigeria, Tanzania, and Uganda. Electricity connections alone require $22 billion per year in capital spending on grids (mainly distribution networks), generating plants, and off‐grid solutions. Clean cooking requires around $2.5 billion per year of investment in clean cookstoves and other end-use equipment. Current investment falls far short of these levels.”
With natural gas feedstock from the Oil Mining Lease (OML) 104, UTM Offshore is developing, designing, and building an FLNG facility with a nameplate Liquified Natural Gas (LNG) production capacity of 1.2 million metric tons per year and a storage capacity of 200,000 cubic meters, as well as ancillary facilities, to be situated 60 kilometers from the shore of Akwa Ibom State, Nigeria.
