Nigeria FLNG project secures 15 years of supply ahead of a fourth-quarter decision

UTM Offshore has signed a wet gas sale and purchase agreement with the NNPC and Seplat Energy joint venture for 200 million standard cubic feet a day from the Yoho field. The $5 billion development is owned 72% by UTM, 20% by NNPC and 8% by Delta State.

The Yoho field sits on OML 104, roughly 60km off the Niger Delta coast, above proven reserves of 2.2 trillion cubic feet. On 8 July, at Nigeria Oil and Gas Energy Week in Abuja, the joint venture between the Nigerian National Petroleum Company and Seplat Energy Producing Nigeria Unlimited committed 200 million standard cubic feet a day from it to UTM FLNG for fifteen years.

The volume is around 5.7 million cubic metres a day, sized to support annual production of 1.8 million tonnes of LNG for export and 300,000 tonnes of liquefied petroleum gas for the domestic market. Julius Rone of UTM Offshore said the agreement puts a final investment decision within reach in the fourth quarter of this year, with the first cargo targeted for 2030.

The agreement was signed by Rone alongside Bayo Ojulari of NNPC and Roger Thompson Brown of Seplat, with Ekperikpe Ekpo, Minister of State for Petroleum Resources for gas, present. Ojulari said the arrangement gives buyers assurance of stable supply and gives lenders the confidence they need on long-term commercial viability.

Ownership is what separates this from Nigeria’s earlier large gas developments, which were led by international majors. UTM Offshore holds 72 per cent, NNPC 20 per cent and the Delta State government the remaining 8 per cent. Total investment is put at $5 billion, split between $2 billion for the first phase and $3 billion for the second, with Afreximbank as lead financier on phase one.

The counterparty structure is what makes the feed gas financeable. A state-owned national oil company on the supply side offers a lender a degree of certainty a purely commercial arrangement cannot, and an independent Nigerian operator with producing assets alongside it supplies the execution record. The chain runs Nigerian from the wellhead through to the project equity.

Rone has described the project as a way of commercialising gas that is currently stranded offshore. It sits inside the Decade of Gas programme and its declared aim of a gas-powered economy by 2030, the same year the first cargo is due to leave the Yoho field.