An indigenous petroleum corporation, UTM Offshore, will formalize a front-end engineering design (FEED) contract for Nigeria’s inaugural floating liquefied natural gas (FLNG) facility today.
Reportedly, UTM Offshore, Technip Energies, KBR, and JGC Corporation will formalize the FEED contract in London.
The project will automatically transition to the execution phase once the contract is finalized.
The African Export-Import Bank (Afreximbank) disclosed in July 2022 that it had formalized a contract with UTM Offshore for financing a project preparation facility. Initiatives aimed at propelling the company’s FLNG project towards financial viability will receive partial funding from Afreximbank.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), previously known as the Department of Petroleum Resources (DPR), granted UTM Offshore a license in February 2021 to construct Nigeria’s inaugural floating liquefied natural gas (FLNG) production facility.
Factors for Growth in the African LNG Market
Consumption of natural gas in Africa is anticipated by the International Energy Agency (IEA) to rise by 3.3% yearly on average, reaching nearly 195 billion cubic meters (bcm) by 2025. The industrial and energy requirements of Algeria, Egypt, and Nigeria are the primary drivers of this increase.
According to the IEA’s 2022 African Energy Outlook, employing natural gas will be essential to enhance access to modern energy within Africa. Substantial investments are required in areas such as clean cooking, electrification, and industrial growth. The forecast states:
“Achieving universal access to modern energy in Africa by 2030 would necessitate an investment of $25 billion annually – roughly a quarter of total energy investments in Africa prior to the pandemic – but slightly exceeding 1% of global energy investments and comparable to the expense of a single large LNG terminal investment.
“Nearly half of this investment would be concentrated in just five nations – Democratic Republic of Congo (DRC), Ethiopia, Nigeria, Tanzania, and Uganda. Electricity connections alone demand $22 billion per year in capital investment for grids (primarily distribution networks), generating stations, and off-grid solutions. Clean cooking calls for about $2.5 billion annually for investments in clean cookstoves and related equipment. Current investments are significantly below these thresholds.”
With natural gas sourced from the Oil Mining Lease (OML) 104, UTM Offshore is developing, designing, and constructing an FLNG facility with a nominal Liquefied Natural Gas (LNG) production capacity of 1.2 million metric tons annually and a storage capacity of 200,000 cubic meters, along with auxiliary facilities, to be located 60 kilometers from the coastline of Akwa Ibom State, Nigeria.
