Nigeria is taking a major step towards expanding its natural gas sector. UTM Offshore Ltd. has been granted a license to build the nation’s first-ever floating liquefied natural gas (LNG) facility, which is expected to produce 2.8 million metric tons per year.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) issued the license, marking a significant milestone for the country’s gas ambitions. “This marks a significant milestone and aligns with the gas expansion ambitions of the government,” said Farouk Ahmed, the Authority’s Chief Executive.
This project is part of Nigeria’s broader goal to tap into its 206 trillion cubic feet of proven gas reserves. Much of this gas is currently either flared or reinjected into wells. Ahmed added, “The project aligns perfectly with our need to curb wasteful gas flaring and utilize our resources more effectively.”
The floating LNG facility, which will be located offshore in Akwa Ibom state, is scheduled to be inaugurated in 2028. Full production of LNG, petroleum gas, and condensate is expected by 2029.
Initially, UTM Offshore Ltd. was granted approval in 2019 to build a smaller plant with a capacity of 1.2 million metric tons per year. However, due to the surge in global LNG demand, the project has been upgraded to a 2.8 million ton capacity.
“The increase in global demand for LNG made it necessary to expand the facility’s capacity,” explained Ahmed. “This expansion allows us to better meet both domestic and international needs.”
Key Investments and Partnerships
The project is backed by significant financial and technical support. In 2021, UTM signed a memorandum of understanding (MoU) with the African Export-Import Bank to raise $2 billion for the project. The bank has already secured first-level approval to invest $350 million.
In addition, UTM has partnered with Japan’s JGC Corporation and Houston-based KBR Inc. to design the floating facility. The Vitol Group, a global energy trader, has also signed an off-take agreement to purchase LNG from the plant.
Government and Corporate Collaboration
Nigeria’s state-owned Nigerian National Petroleum Company (NNPC) Ltd. holds a 20% stake in the project, underlining the government’s involvement. Feedstock for the plant is expected to come from an offshore oil field operated by Exxon Mobil Corp. in partnership with NNPC.
Julius Rone, UTM’s Chief Executive Officer, emphasized the importance of the project, stating, “It’s a stranded gas that can only be monetized through floating LNG technology. This creates a unique opportunity for the development of Nigeria’s vast gas reserves.”
Future Prospects
This project represents a major leap forward for Nigeria’s energy sector. As global demand for LNG continues to grow, this floating LNG plant could play a crucial role in positioning Nigeria as a major player in the international gas market.
With the backing of key players and the support of the government, the project is poised to transform not only Nigeria’s natural gas industry but also its broader economic prospects.
