The prospect of new earning foreign exchange in natural gas revenue from natural gas exports to Europe is a key reason analysts consider the newly signed UTM Floating LNG plant as a game changer for Nigeria.
The1.52 million tonnes per annum (MTPA) FLNG facility with a capacity to process 176 million standard cubic feet of natural gas per day and condensate, will have a storage capacity of 200,000 cubic meters, and would be located 60km from the shore of Akwa Ibom State, Nigeria, was conceived to serve the global energy market.
“We opted for FLNG because FLNG was originally developed to help realize the promise of natural gas – specifically, to bring gas to the global market from small offshore fields and nearshore terminals in areas lacking infrastructure – especially pipelines,” said Julius Rone, Chairman/CEO UTM Offshore Limited at the deal signing in London on Wednesday.
UTM Floating LNG Limited, JGC Corporation, Technip Energies and Kellogg Brown & Root (KBR) Engineering Companies signed a Front End Engineering Design (FEED) contract for the construction of the $5billion Floating LNG plant in Nigeria.
“UTM Offshore’s signing of the deal will be a game changer within Africa’s gas market. The penetration of FNLG in Africa, which started in Cameroon and expanded to Angola and Mozambique and now to Senegal, Mauritania and Nigeria, highlights Africa’s commitment to unlocking the full exploitation of its gas resources,” said NJ Ayuk, the Executive Chairman of the African Energy Council, a think, stating that Ayuk said he believes UTM Offshore’s FLNG project development will not only open doors for energy security and GDP growth but will bring in world class technical know-how among the local people while creating long-term employment opportunities in line with Nigeria’s local content laws.”
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The deal which is being financed by Africa-Exim Bank and is geared to boost export earnings and could dent demand shortages at home with expanded capacity. The FEED contract, the project owner says, is a step towards a final investment decision expected next year.
“We opted for FLNG because FLNG was originally developed to help realize the promise of natural gas – specifically, to bring gas to the global market from small offshore fields and nearshore terminals in areas lacking infrastructure – especially pipelines.
Timipre Sylva, minister of state for Petroleum Resources, said the project vindicates the government’s policy towards increasing natural gas production and consumption as encapsulated in a Decade of Gas.
And as the world shifts to cleaner energy sources, Sylva said Nigeria is in a vantage position with over 209 Trillion Cubic Feet (TCF) of proven gas and a potential upside of 600 TCF of gas, the most extensive in Africa, and in the top 10 globally.
“However, due to a multitude of factors including a lack of investment, transportation and export infrastructure, and technological challenges, the majority of our gas deposits have yet to be produced.
“Hence the need to unlock our huge natural resources and drive investments with Floating LNG Technology even with the latter serving as a game changer for Nigeria in sync with the Decade of Gas initiatives of the Federal Govt. of Nigeria,” he said.
Floating LNG offers the benefit of flexibility, is cheaper and removes constraints involving constructing and securing pipelines to transport gas.
The traditional LNG Model is pursuing “Economies-of-Scale” with major projects of over 10 MTPA requiring many long-term offtake contracts to underpin the financing.
The FLNG option offers significant advantages over traditional onshore liquefaction plants ranging from delivering projects cheaper and faster as it offers reduced capital costs, particularly as its technical partners shipyards have gained experience with construction and standardized solutions are employed.
ExxonMobil and NNPC are expected to provide feed gas while UTM Offshore will be the LNG producer and Vitol as the LNG buyer. Analysts say the facility is expected to exploit 2.2 Tcf of proven gas reserves within OML 104 over a period of 20 years, a development that will maximize Nigeria’s gas monetisation for economic and gross domestic product growth.
