Nigerian Government celebrates deal for take-off first FLNG facility
Oredola Adeola
The Nigerian Government has applauded UTM Offshore Limited and its technical partners for signing the agreements for the commencement of Front End Engineering Design (FEED) for Nigeria’s first Floating Liquefied Natural Gas (FLNG) facility.
Horatius Egua, Senior Adviser, Media and Communications to the Minister of State for Petroleum Resources, Chief Timipre Sylva, confirmed this in a statement obtained by EnergyDay on Thursday.
EnergyDay gathered that the agreements which involved three technical partners namely, Kellogg Brown and Root (KBR) UK, Japan Gas Corporation (JGC), and TechnipEnergies Limited had earlier been signed at a brief event at the Hilton Park Lane, London, UK.
The FEED contract with the three firms essentially entails conducting for UTM Offshore Ltd, various studies to figure out technical issues and estimate investment costs for the FLNG facility prior to the Engineering, Procurement, and Construction (EPC) phase. The timeline for this phase of the FLNG project is 10 months.
The Minister for State Petroleum Resources, in his reaction to the agreement by the parties, commended the pioneering efforts of UTM Offshore Ltd management.
Sylva said that the Nigerian government would continue to support and create enabling environment for business investments in the country, especially in gas development.
However, the statement disclosed that the FEED contract signing is a follow-up to the successful execution of the pre-FEED agreement between UTM Offshore Ltd with JGC, a leading International Engineering Design, Procurement and Construction firm.
It was further revealed that the pre-FEED scope was completed within four months from the commencement date. KBR provided due diligence on the JGC scope by conducting a third-party review of all deliverables from JGC during the Pre-FEED. It would be recalled that UTM Offshore Ltd entered into the pre-FEED agreement with JGC and KBR in May 2021.
Meanwhile, Sylva reiterated Nigeria’s commitment to leveraging natural gas as the nation’s transition fuel with Floating LNG Technology as the game changer, adding that the Petroleum Industry Act was improving the industry’s reputation, paving the way for investments, jobs, economic diversification and strengthening ability to fulfill world’s energy demand.
He said, “We have already proclaimed that gas is our transition fuel and a destination fuel, and we anticipate that it will be a major component of our energy mix by the year 2060.
“The UTM FLNG would target the processing of associated gas currently flared to cut carbon emissions and monetise additional reserves for domestic and global markets, which aligned with Nigeria Gas Flare Commercialisation Programme (NGFCP) and the decade of gas agenda.
“There are generous incentives to enable the development, distribution, penetration, and utilisation of gas.
“This is why the UTM Offshore project will involve the development and financing of a 1.52 Million Tonnes Per Annum (MTPA) FLNG facility with a capacity to process 176 million standard cubic feet of natural gas per day and condensate,” he said.
Mr. Julius Rone, Managing Director and Chief Executive Officer of UTM Offshore Ltd, on his part, noted that Nigeria is committed to achieving the realisation of the plan for the energy transition.
He said, “UTM Offshore, align perfectly with the government toward harnessing Nigeria’s potential of about 600 trillion cubic feet of gas. It has the enormous potential to diversify our country’s economy.
“We also agree that the rising global demand for cleaner energy sources has offered Nigeria an opportunity to exploit gas resources for the good of the country,” he said.
Rone however disclosed that UTM Offshore is impressed with JGC’s handling of the pre-FEED component of the FLNG project, hence the resolve to reengage the firm for the main FEED phase.
Prof. Benedict Oramah, President of the African Export-Import Bank (AfreximBank), in his remark lauded the transparent pursuit of the FLNG project by UTM Offshore Ltd and pledged the full backing of the bank for the FLNG project.
Oramah, however, said the intervention of the President in optimising the utilisation of Nigeria’s gas resources came at a time when the traditional (multinational) investors in oil-gas initiatives decided to stop funding oil and gas operations in Africa due to climate change.
“We are not going to keep waiting for multinationals to help us harness our wealth. AfreximBank is supporting the FLNG project in Nigeria because we have seen that UTM offshore Ltd. is serious.
“In December 2021; UTM Offshore Ltd and AfreximBank signed a five billion dollars Memorandum of Understanding (MoU) for the financing of the UTM FLNG.
“The UTM FLNG is one of the projects AfreximBank is very proud of; just like the Dangote refinery. We are proud to be associated with these two projects in Nigeria,” he said.
The statement further disclosed that UTM Offshore Ltd is pioneering the development of the FLNG facility in collaboration with LNG Investment Management Services (LIMS), a subsidiary of Nigeria National Petroleum Corporation Limited (NNPC Ltd).
The facility, a newly built vessel, will receive gas feedstock from an existing offshore facility, treat it to the required LNG standard, liquefy the gas, store the LNG and offload to LNG carriers.
At completion, the floating LNG shall have an LNG production capacity of 1.2 mmtpa, Turret and Mooring System, Gas pre-treatment modules, LNG production modules, living quarters, self-contained power generation and utilities as well as capacities for LNG storage and offloading.
