09 Dec UTM Offshore signs $5bn MoU with Afreximbank for Nigeria’s first floating LNG (FLNG) Project
Nigerian marine and services group, UTM Offshore and the African Export-Import Bank (Afreximbank) have signed a Memorandum of Understanding (MoU) to raise $2 billion, in the first instance, for the development of Nigeria’s first floating liquefied natural gas (FLNG) project. Afreximbank further committed to funding the second phase of the project to the tune of $3 billion.
The MoU to this effect was signed in Abuja on Tuesday by Mr.Julius Rone, Group Managing Director/CEO of UTM Offshore and Dr. Benedict Okey Oramah, President and Chairman of Afreximbank.
The agreement paves the way for additional collaboration between UTM Offshore and the Afreximbank to support a future final investment decision (FID) on UTM’s FLNG project.
In February 2021, UTM Offshore Limited received a License to Establish (LTE) from Nigeria’s former Department of Petroleum Resources (DPR) for the installation of an FLNG unit on oil mining lease (OML) 104.
The block is operated by the joint-venture of Mobil Producing Nigeria (operator, 40%) and the state-owned Nigerian National Petroleum Corp. (NNPC, 60%) and contains the producing Yoho field.
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, while KBR was appointed Owners Engineer. Global energy and commodities trader Vitol has also joined the consortium as off-taker for the LNG.
“The UTM Offshore FLNG will be the first such project developed by an African company on the continent. It will also significantly contribute to the Nigerian government’s agenda of reducing the flaring of associated gas across our industry,” said Julius Rone, Group Managing Director/CEO of UTM Offshore.
He added that “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,” The project notably involves the development and financing of a 1.2m tonnes per annum FLNG facility with a capacity to process 176 MMscfd of natural gas and condensate. The unit would target the processing of associated gas currently flared in order to cut carbon emissions and monetise additional reserves for the domestic and global markets.
At the signing event, the President of Afreximbank, Prof. Benedict Oramah commended Mr. Julius Rone and his team at UTM Offshore Limited for rising up to one of the greatest challenges of this era.
He said, “Across the world, nations are evolving climate change goals; Africa has not been able to leverage the abundant opportunities in the continent to help meet the global climate change goals. That is why Afreximbank considers what UTM Offshore is doing, the development of Nigeria’s first FLNG not just unique but laudable. UTM Offshore is helping not just Nigeria but the whole of Africa to transition to clean energy and in the process, the firm is creating huge employment opportunities for Nigerians. This is a landmark project that Afreximbank takes very seriously.”
Beyond financing UTM’s FLNG project to tune of $5billion in two phases, the President of Afreximbank disclosed that the bank would be ready to offer other financial and insurance support services to the FLNG project.