Business - Companies - Energy Transition - News - November 20, 2022

Partners sign engineering design agreement for Nigeria’s First Floating LNG Facility

By Bassey Udo

Nigeria’s quest for energy transition received a huge boost on Wednesday when an indigenous firm, UTM Offshore Limited, signed agreements with three technical partners, Kellogg Brown and Root (KBR) UK, Japan Gas Corporation (JGC) and TechnipEnergies Limited, for the commencement of the Front-End Engineering Design (FEED) for Nigeria’s first Floating Liquefied Natural Gas (FLNG) facility.

The Agreements were signed at the Hilton Park Lane, London, UK for the FEED contract with the three firms essentially for UTM Offshore Limited to conduct various studies to figure out technical issues and estimate rough investment costs for the FLNG facility.
The completion of the studies with a timeline of about 10 months would pave the way for the Engineering, Procurement and Construction (EPC) phase of the project.

The FEED contract signing is a follow-up to the successful execution of the pre-FEED agreement between UTM Offshore Limited with JGC, a leading International Engineering Design, Procurement and Construction firm.

The Pre-FEED scope was completed within four months from the commencement date, with KBR providing due diligence on the JGC scope, by conducting a third-party review of all deliverables from JGC during the Pre-FEED.

UTM Offshore Limited entered into the pre-FEED agreement with JGC and KBR in May 2021.

Speaking at the FEED contract signing event, the Minister of State for Petroleum Resources, Timipre Sylva, applauded the pioneering efforts of Julius Rone and UTM Offshore Limited, assuring that the Federal Government would continue to support and create the enabling environment for business investments in the country, especially in the area of gas development.

“The PIA (Petroleum Industry Act) is already improving the petroleum industry’s reputation, paving the way for new investments, creating jobs, supporting the economic diversification agenda and strengthening Nigeria’s ability to fulfil the world’s expanding energy demand,” the Minister said.

The Minister reiterated the Federal Government of Nigeria’s determination to leverage natural gas as the nation’s transition fuel with Floating LNG Technology as the game changer.

“As a developing nation, we believe that affordable, accessible and reliable energy will continue to be essential to sustaining and powering our growing economy, and to lift millions out of poverty,” Sylva said, adding that only gas can help to bridge the current energy gaps in the country.

Stressing the significance of innovation, technology and policy as key drivers of change in the energy sector, Sylva again maintained that “no doubt, gas remains the solution to ensuring our energy security, economic competitiveness, and a reduction of greenhouse gas emissions.

“We have already proclaimed that gas is our transition fuel and a destination fuel, and we anticipate that it will be a major component of our energy mix by the year 2060,” he added.

The minister noted that the UTM FLNG 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, which aligns with the Federal Government’s gas flare commercialization program (The NGFCP) and the decade of gas agenda.

“There are generous incentives to enable development, distribution, penetration, and utilisation of gas under the PIA,” Sylva said, adding that “this is why the UTM Offshore project will involve the development and financing of a 1.52 million tonnes per annum (MTPA) FLNG facility with a capacity to process 176 million standard cubic feet of natural gas per day and condensate.”

At the signing ceremony, the Managing Director and Chief Executive Officer of UTM Offshore Limited, Julius Rone underscored the fact that like most other nations of the world, Nigeria was keen on working assiduously towards achieving energy transition.

Rone said Nigeria’s energy transition necessarily should start with moving from huge dependence on crude oil to natural gas.
“Like I have said in several fora, for us in Africa, especially Nigeria, energy transition is steeped in harnessing our abundant gas resources. At UTM Offshore, we completely agree with President Muhammadu Buhari that given Nigeria’s potential of over 600 trillion cubic feet of gas, the commodity has the enormous potential to diversify our country’s economy.

”We also agree that the rising global demand for cleaner energy sources has offered Nigeria an opportunity to exploit gas resources for the good of the country,” Rone said.

“We thank the President for making gas development and utilization a national priority to stimulate economic growth, further improve Nigeria’s energy mix, drive investments, and provide the much-needed jobs for our citizens in the country,” he added.

Rone disclosed that UTM Offshore was impressed with JGC’s handling of the pre-FEED component of the FLNG project hence the resolve the reengage the firm for the main FEED Phase.

“JGC Corporation came highly recommended, given the several similar projects the firm had undertaken across the world. Indeed, of the total number of five FLNGs in the world today, JGC Corporation was involved in the design, construction and commissioning of three.

“We do not take for granted the fact that what UTM Offshore Limited is doing is largely novel. It is the first of its kind in Nigeria and we are very excited about this trail-blazing project; the opportunity to build from the scratch, the first Floating Liquefied Natural Gas Facility in country.

“That is why we cannot afford to settle for less, hence the reason we contracted JGC Corporation, clearly one of the leading firms in the LNG Construction sector in the world, to provide both the Pre-Front End Engineering Design Services and the main FEED for this first Floating LNG facility in Nigeria,” the UTM Offshore Chief Executive enthused.

“Today, we are here to consummate the very fantastic working relationship between UTM FLNG, KBR, JGC, Technip Energies Ltd and Cryogas Equipment Private Limited as we sign the main Front End Engineering Design (FEED) for Nigeria’s first Floating Liquefied Natural Gas Facility,” he added

Speaking in the same regard, the President of African Export Import Bank (AfreximBank), Benedict Oramah, lauded the tenacious and transparent pursuit of the FLNG project by Julius Rone and his team members at UTM Offshore Limited and pledged the full backing of the Bank for the FLNG Project.

“Nigeria is a gas zone holding the highest reserve of gas in Africa. But for years, we were burning our wealth through gas flaring. It is a good thing that President Muhammadu Buhari decided to press the pause button so that Nigeria can optimize the utilization of the country’s gas resources to enhance the lot of the nation, create wealth for the people from what is abundant in the country,” the President of AfreximBank remarked.

Oramah however noted that the intervention of President Buhari in optimizing the utilization of Nigeria’s gas resources came at a time when the traditional (multinational) investors in oil gas initiatives decided to stop funding oil and gas operations in Africa due to climate change.

“It is now left for us, as Africans to find ways to convert our gas resources to wealth. We are not going to keep waiting for the multinationals to help us harness our wealth. AfreximBank is supporting the FLNG project in Nigeria, because we have seen that Julius Rone is serious.

“He (Rone) did not hesitate to put his leg in the water. So, AfreximBank did not hesitate to jump into the lake with him. AfreximBank will continue to support the UTM FLNG project until completion,” Oramah said.

In December 2021 UTM Offshore Limited and AfreximBank signed a $5billion memorandum of understanding (MoU) for the financing of the UTM FLNG.

“The UTM FLNG is one of the projects AfreximBank is very proud of; just like the Dangote refinery. We are proud to be associated with these two projects in Nigeria.

FLNG is a huge project and it is not for traders. You need an entrepreneur in the strict sense of the word. This is a project that will take off in 2026. But Julius Rone has shown that he is willing and able to pay the price and wait for almost a decade to start reaping from the fruit of his labour. This is remarkable.

“We will work and walk with Julius Rone on this project. In fact, Nigeria needs more dogged entrepreneurs like Julius Rone and I commend Mr. President for recently conferring Julius Rone with the national award of Officer of the Federal Republic (OFR). He truly deserves the honour,” the AfreximBank President said.

Also at the London event were the heads of the regulatory authorities in Nigeria’s oil and gas sector, namely the Executive Secretary, Nigeria Content Development and Monitoring Board (NCDMB), Simbi Wabote; the Chief Executive Officer, Nigerian Upstream Petroleum Regulatory Commission, Gbenga Komolafe, and the Chief Executive Officer, Nigeria Midstream and Downstream Petroleum Regulatory Commission (NMDPRA), Farouk Ahmed.
All the regulatory Chiefs commended the tenacity of Mr. Rone and his team and pledged their continuing support for the UTM FLNG Project.

The contract signing event was spiced up by firm commitments by the UTM FLNG’s technical partners, inclding the President of JGC Holdings, Tadashi Ishizuka; the Chief Operating Officer of Technip Energies Limited, Marco Villa; the Vice President KBR, Paul Baillie and the Head of LNG Operations at Vitol, Steve Brann, to deploy their best minds and technologies to actualize Nigeria’s first Floating Liquefied Natural Gas facility being developed by UTM Offshore limited.

UTM Offshore Limited is pioneering the development of the FLNG facility in collaboration with LNG Investment Management Services (LIMS), a subsidiary of Nigeria National Petroleum Corporation PLC (NNPC Limited).

The facility, a newly built vessel, will receive gas feedstock from an existing offshore facility, treat it to required LNG standard, liquefy the gas, store the LNG and offload to LNG carriers.

When completed, the floating LNG will have an LNG production capacity of 1.2 million metric tonnes per annum of gas, 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.

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