December 9, 2021

UTM, Afreximbank sign $5bn MoU for Nigeria’s first floating LNG

Afreximbank grows assets to $19bn

Nigeria’s marine and services group, UTM Offshore Limited, and African Export-Import Bank (Afreximbank) have signed a Memorandum of Understanding (MoU) to raise $5 billion for the development of Nigeria’s first floating liquefied natural gas (FLNG) project.  

The deal that is in two parts would see the continental bank raising $2 billion to support the first phase with a commitment to fund the second phase of the project by another $3 billion.    

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Signed by the Group Managing Director/CEO of UTM Offshore, Mr. Julius Rone, and President and Chairman of Afreximbank, Dr. Benedict Okey Oramah, the MoU paves the way for additional collaboration between the two entities to support a future final investment decision (FID) on the project, which UTM has been studying and conceptualising since 2020.    

UTM Offshore Limited was granted a License to Establish (LTE) by Nigeria’s former Department of Petroleum Resources (DPR) for the installation of an FLNG unit on oil mining lease (OML) 104 in February 2021.    

The block, which contains producing Yoho field, is operated by the joint-venture of Mobil Producing Nigeria (operator, 40%) and the state-owned Nigerian National Petroleum Corporation (NNPC, 60%).

  Preparations for the project are now in full swing and benefit from robust global and technical expertise. The pre-Front End Engineering Design (Pre-FEED) contract was awarded to JGC Corporation of Japan in May 2021 while KBR was appointed Owners Engineer. Global energy and commodities trader, Vitol, has also joined the consortium as an off-taker for the LNG.    

  “The UTM Offshore FLNG will be the first of such a project developed by an African company on the continent,” Rone said, adding: “It will also significantly contribute to the Nigerian government’s agenda of reducing the flaring of associated gas across our industry.”  

  According to him, “As Africa’s FLNG industry grows, we are well-positioned to offer attractive project economics by developing shallow water gas reserves, while bringing significant environmental benefits to our industry as a whole.”    

“This is a landmark project that Afreximbank takes very seriously,” Oramah said.

According to Rone, the floating LNG, when fully completed in 2026, 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.