UTM Offshore has signed a memorandum of understanding (MoU) with the African Export-Import Bank (Afreximbank) in support of a floating LNG (FLNG) project.
UTM CEO Julius Rone signed the MoU with Afreximbank president and chairman Benedict Oramah, on December 7, a statement from the company said.
The MoU covers the raising of $2 billion. The bank also committed to funding a second phase of the FLNG plan, a commitment of $3bn.
The Nigerian company said the agreement would see Afreximbank support a final investment decision (FID) in future. It has said the aim is to reach first LNG in 2026.
UTM’s project is based on an FLNG vessel at OML 104, which holds the Yoho field. The operator of OML 104 is Mobil Producing Nigeria (MPN) with 40%. Nigerian National Petroleum Corp. (NNPC) owns the remaining equity.
Japan’s JGC Corp. won pre-front-end engineering and design (pre-FEED) work on the plan in May, completing this in October. KBR is acting as owner’s engineer, while Vitol is part of the consortium as a future offtaker of LNG.
A consultant to the project, Yahuza Kassim, told Energy Voice that the plan involved reaching an FID in the fourth quarter of 2022.
Rone said the FLNG project would be the first developed by an African company on the continent. Exporting LNG would “significantly contribute” to the Nigerian government’s hopes about reducing flaring.
“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,” he said.
Afreximbank’s Oramah said UTM’s FLNG plan was “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.”
“Truth is that nobody will develop Nigeria but Nigerians,” he said.
The FLNG plan would have 1.2 million tonnes per year of capacity, processing 176 million cubic feet per day of gas and condensate. It would aim to capture reserves that are currently being flared. The project would involve a newbuilt vessel, UTM said, receiving gas from the existing offshore platforms at OML 104.
The deal would extend Afreximbank’s involvement with Nigerian oil and gas plans. In November, the financial institution agreed to provide a $1.04 billion facility to Nigerian National Petroleum Corp. (NNPC).
The transaction consisted of a pre-export/shipment finance facility, underpinned by a forward sale agreement and offtake contracts. NNPC agreed to enter a forward sales agreement for the delivery of 35,000 barrels per day of crude.
NNPC executive director Umor Ajia said the deal aligned with Afreximbank’s mandate to support local content in Africa’s oil and gas sector.