UTM Offshore Ltd. has received approval to build Nigeria’s first floating liquefied natural gas (LNG) facility, five years after its initial proposal.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority issued a license-to-construct for the LNG project, which has a capacity of 2.8 million metric tons per year.
Farouk Ahmed, head of the regulatory agency, noted that the approval represents a significant milestone and supports the government’s gas expansion goals.
Nigeria, Africa’s leading crude oil producer, aims to reduce its dependence on oil by investing in its largely untapped 200 trillion cubic feet (Tcf) of proven gas reserves. Currently, most of the country’s gas output is flared or re-injected into wells.
Originally licensed for a 1.2 million metric tons per annum (MMtpa) facility in 2019, the project was upgraded to 2.8 million tons due to increased LNG demand.
The floating facility, located offshore in Akwa Ibom state within the Niger Delta, is expected to be commissioned in 2028, with production beginning in 2029. It will produce LNG, petroleum gas, and condensate.
In 2021, UTM signed a memorandum of understanding with the African Export-Import Bank to secure up to $2 billion for the project.
The bank has received preliminary approval to invest $350 million. A final investment decision is anticipated by the end of this year.
The project includes design contracts with Japan’s JGC Corp. and Houston-based KBR Inc., and Vitol Group has an off-take agreement for the LNG produced. Last year, the Nigerian National Petroleum Corp. (NNPC) acquired a 20% stake in the project.
UTM had planned to source feedstock from an offshore field operated by ExxonMobil and NNPC, but this asset is being sold to Seplat, which also aims to develop its gas reserves. Discussions are ongoing to involve UTM in the midstream segment of the project.
