…targets revenue above $7bn over 20 years
Nigerian National Petroleum Company Limited (NNPCL) Thursday signed the final investment decision (FID) for the Ubeta Field Development Project with TotalEnergies. The project is expected to yield revenue above $ 7 billion over 20 years.
The Ubeta Field Development Project aims to unlock 350 million standard cubic feet per day (MMSCF/D).
Speaking during the signing ceremony in Abuja on Thursday, Mele Kyari, the Group chief executive officer of the NNPCL said that the project was made possible due to the fiscal environment put in place by Tinubu-led administration.
He explained that the executive order on reduction of processes around contracting has allowed new fiscal terms for non-associated gas, and ‘sorting out’ issues associated with local content development.
“I’m very convinced that many more projects will come alongside this as we progress. And maybe not the right moment to make those announcements, but I know that a number of projects have been enabled by the executive order of Mr. President,” Kyari said.
“No doubt, this project will create opportunities, jobs, and everything that you can imagine, including making our energy investment much more productive. I know for sure that the engagements with our other partners will ensure delivery of gas sufficient to keep our train 1 to 7 active and at full capacity, and also realize our ambitions for train 7.”
The project according to Kyari, is expected to be a catalyst for job creation, and a boost for gas production in the country.
Kyari speaking further said that the company has declared war against crude oil theft to ensure normalcy in crude oil production. Kyari also noted that the country had reached peak production in the last three months with an ongoing effort to achieve a 2 mbpd.
In his remarks, Mike Sangster, the Senior Vice President Africa, TotalEnergies said that the project is part of the company’s strategy to ensure more sustainable energy and less emissions in line with the global energy transition drive.
For him, the project which is non-associated gas will supply a significant volume of gas to the Nigerian Liquified Natural Gas (NLNG) company as well as boost government’s revenue.
According to Sangster, production start-up is expected in 2027, with a plateau of 300 million cubic feet per day (about 70,000 barrels of oil equivalent per day including condensates). He added that Gas from Ubeta will be supplied to NLNG, a liquefaction plant located in Bonny Island with an on-going capacity expansion from 22 to 30 Mtpa, in which TotalEnergies holds a 15% interest.
“You know, Nigerian energy is owned 49% by the state, so it will be a major revenue contributor to the country over the coming years. And I think it will also create a number of jobs as well for Nigerians.
“And again, we see gas very much as a transition fuel, and this is part of the energy agenda. You know, our strategy as a company is, you know, more energy, less emissions, that are more sustainable. I think UBETA fits exactly into that category.
He explained that the company is leveraging the existing facilities on OML 58 to provide the energy needed for the production of gas from UBETA.
Sangster noted that the carbon intensity of the project will be further reduced through a 5 MW solar plant currently under construction at the Obite site and the electrification of the drilling rig.
“TotalEnergies is working closely with NNPCL to enhance local content, with more than 90 percent of manhours which will be worked locally.
“At the end of 2023, Total Energies became the first company to stop routine flaring in Nigeria with the FLARA project. And again, I think we have been a consistent investor in Nigeria over the past years.
“So I’m really pleased to see what has been done by the government, by authorities over recent weeks and months, really to encourage investments in gas. And I think the changes to the gas fiscal terms as part of the decade of gas is a really important move forward,” he said.
Giving overview of the project, Bala Wunti, the Chief Upstream Investment Officer (CUIO), NNPC Upstream Investment Management Services (NUIMS) said that the project which is a milestone achievement is also a sign of progress in the Nigerian gas industry.
This is as he disclosed that the project has an anticipated life cycle revenue in excess of $7 billion over the next 20 years.
“This is a gas project, a very important gas project for this country. It has significant commercial, economic and strategic importance. It’s going to deliver about 350 million standard cubic feet per day of gas to Nigerian LNG.
“This is almost 30 percent of the requirement to fit in the Train 7. It can therefore be seen that this particular project is an enabler for Train 7, and that creates the needed confidence for both investors and the operators of the business to progress. On the journey, we have ticked all boxes of all the final investment decision parameters, including best practices around sustainability, taking into consideration the World Bank equator principle.
“Everything has been ticked, and the project is indeed a valuable one. We anticipate a life cycle revenue of in excess of $7 billion over the next 20 years. And this is a major step, major step for monetising these gas that have been living on the ground since the discovery of this field,” he said.
