UTM Offshore, an indigenous oil company, will today sign a front-end engineering design (FEED) agreement for Nigeria’s first floating liquefied natural gas (FLNG) facility.
A press statement issued by the company and seen by Nairametrics said the FEED agreement will be signed between UTM Offshore and Technip Energies, KBR, and JGC Corporation in London.
Signing the agreement will automatically move the development to the implementation stage.
The backstory: In July 2022, the African Export-Import Bank (Afreximbank) announced its execution of a project preparation facility financing head of terms with UTM Offshore. Afreximbank will partly finance activities designed to progress the company’s FLNG project to bankability.
In February 2021, the Nigerian government through the defunct Department of Petroleum Resources (DPR), now known as the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), issued a license to establish Nigeria’s first Floating Liquefied Natural Gas (FLNG) production plant to UTM Offshore.
Africa’s LNG growth drivers: The International Energy Agency (IEA) projects that African natural gas consumption will grow at an average of 3.3% per year to reach almost 195 billion cubic meters (bcm) in 2025. This growth is primarily driven by industrial and power generation needs in Algeria, Egypt, and, Nigeria.
In its 2022 African Energy Outlook, the IEA stated that increasing access to modern energy in Africa will require the use of natural gas, which needs a lot of investment across various areas like clean cooking, electrification, and industrialization. The outlook says:
- “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.”
For the record: UTM Offshore is undertaking the development, design, and construction of an FLNG facility with a Liquified Natural Gas (LNG) nameplate production capacity of 1.2 million metric tons per annum and a storage capacity of 200,000 cubic meters, as well as ancillary facilities to be located 60 kilometres from the shore of Akwa Ibom State, Nigeria. with natural gas feedstock from the Oil Mining Lease (OML) 104.