UTM’s chief expects FID on Nigeria’s first FLNG project in Q1 2024

UTM Offshore expects to take a final investment decision on Nigeria’s first FLNG project in the first quarter of 2024, and to award the EPCIC contract in the second quarter, the company’s managing director and chief executive, Julius Rone, told LNG Prime on Thursday.

This means that the final decision has been delayed as Rone said in July that UTM was targeting FID by the end of this year.

However, the company has made progress on the FLNG development this year.

UTM has on Tuesday signed a shareholders agreement (SHA) for the FLNG project with state-owned Nigerian National Petroleum Company (NNPC) and the Delta State government.

Under the deal, UTM holds 78 percent equity of the FLNG project, NNPC owns 20 percent, and the Delta State government owns 8 percent.

Capacity boost

The partners said that the FLNG facility is expected to produce 1.81 to 2.72 million metric tonnes per annum (mtpa) of gas, including over 300,000 metric tonnes of LPG (cooking gas) which will be dedicated to the domestic market.

This is a major increase in the project’s capacity as Rone previously said that the first FLNG would have a capacity of 1.5 mtpa, while the company also aims to install a second FLNG offshore Nigeria.

UTM's chief provides update on Nigeria's first FLNG project
Julius Rone (Image: UTM Offshore)

Asked about whether this new capacity estimate includes two production units, Rone said that this capacity is planned for only one FLNG and it is the result of the front-end engineering and design (FEED) work completed by France’s Technip Energies and Japan’s JGC.

UTM awarded the FEED contract to the two firms in November 2022. The firm also selected US-based KBR as the owner’s engineer.

Under the FEED, Technip Energies worked on the hull and the mooring system design, while JGC worked on the topsides design.

The FLNG will process associated gas from the Yoho field currently flared in order to cut carbon emissions and monetize additional reserves for the domestic and global market.

Yoho field lies in Oil Mining Lease (OML) 104, offshore Nigeria. ExxonMobil’s unit MPN holds a 40 percent interest in the joint venture and NNPC holds a 60 percent stake.

EPCIC contract

Rone said that the company plans to award the engineering, procurement, construction, installation, and commissioning (EPCIC) contract to Technip Energies and JGC in May next year.

He declined to comment on the price tag of the deal.

According to Rone, the two firms would then subcontract a shipbuilder in China to build the hull and integrate topsides.

Shipbuilding sources previously told LNG Prime that China Merchants Heavy Industry and Cosco Shipping (Qidong) Offshore are competing to win the contract.

Up to $5 billion

As per finances, UTM joined forces last year with the African Export-Import Bank (Afreximbank) to secure up to $5 billion for the development of Nigeria’s first floating LNG production unit, including about $2 billion for the project’s first phase.

Following this memorandum, UTM and Afreximbank signed a project preparation facility in June this year to progress the project.

Under this deal, Afreximbank committed to funding the feasibility studies such as geotechnical studies and others prior to FID and financial close.

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