Nigeria’s UTM Offshore Ltd. has received approval to build the country’s first floating liquefied natural gas (LNG) facility, five years after its initial announcement. The Nigerian Midstream and Downstream Petroleum Regulatory Authority granted the Abuja-based company a license-to-construct the LNG project, which is estimated to produce 2.8 million metric tons per year.
“This marks a significant milestone and aligns with the government’s gas expansion ambitions,” said Farouk Ahmed, head of the regulatory authority. Nigeria, Africa’s largest crude oil producer, is shifting its focus from oil to gas, aiming to capitalize on its 200 trillion cubic feet of largely untapped gas reserves. Much of the country’s gas output is currently flared or reinjected into wells.
Initially, UTM was granted a license in 2019 for a 1.2 million metric tons facility, but due to rising global LNG demand, the project has been expanded to 2.8 million metric tons.
2028 Commissioning Timeline
The LNG plant will be located offshore in Akwa Ibom state, part of the oil-rich Niger Delta, with commissioning expected in 2028 and first-gas production to follow a year later. The facility will produce liquefied natural gas, petroleum gas, and condensate.
In 2021, UTM signed a memorandum of understanding with the African Export-Import Bank to raise up to $2 billion for the project. The bank has received initial approval to invest $350 million in the venture, according to UTM’s CEO, Julius Rone. A final investment decision is anticipated by the last quarter of the year.
UTM has partnered with Japan’s JGC Corp. and Houston-based KBR Inc. to design the facility. Vitol Group has an off-take agreement for the LNG produced at the site. In 2023, state-owned Nigerian National Petroleum Co. Ltd. (NNPC) acquired a 20% stake in the project.
Supply and Feedstock
UTM plans to source feedstock for the project from an offshore oil field operated by Exxon Mobil Corp. in collaboration with NNPC. However, this asset is currently being sold to Seplat, a company with its own plans to develop vast gas reserves. Talks are ongoing regarding Seplat’s involvement in the project’s midstream operations.
Seplat did not immediately respond to requests for comment. Rone commented, “This is stranded gas that can only be monetized through floating LNG technology. It will enhance Seplat’s balance sheet by having a buyer for undeveloped gas.”
This project represents a key step in Nigeria’s shift towards maximizing its natural gas resources while reducing its dependence on crude oil.
