JUST IN: NNPCL, UTM seal deal on $5bn floating LNG project

THE NNPC Limited and UTM Offshore Limited, yesterday, signed a Heads of Terms (HoT) agreement for the construction of the nation’s first indigenous Floating LNG project.

Describing the Floating LNG project as a “must-do” initiative for Nigeria, the NNPC GCEO, Mr. Mele Kyari expressed the company’s readiness to secure gas feedstock for the project.

Similarly, the Group Managing Director, UTM Offshore Limited, Mr. Julius Rone, expressed his delight at the partnership with NNPC Ltd, stating that this milestone achievement showcased the capability of indigenous companies to collaborate with world-class energy conglomerates to drive growth in Nigeria’s energy sector.

He explained that apart from significantly cutting down on gas flaring and supporting the country’s commitment to reducing carbon emissions, the project would also create over 7,000 job opportunities, contributing to the nation’s economic growth and development.

Also, NNPC Limited’s Executive Vice President, Gas, Power & New Energy, Mr. Mohammed Abdulkabir Ahmed said the project aligned perfectly with NNPC Ltd’s goals of ensuring energy availability, affordability, and sustainability while also generating revenue through exports.

However, in a recent interview with Vanguard at the just-concluded Nigeria Oil and Gas, NOG conference in Abuja, said Mr. Julius Rone, said the Final Investment Decision, FID, would be taken before the end of 2023.

He said the front-end engineering design, FEED, is ongoing in Lagos, Yokohama and Paris with JGC, Technic and indigenous companies acting as consultants.

He said: “This stage is very important, especially as it will enable us to have an idea about the project cost, prepare a full budget and work towards the FID. This is a process that cannot be skipped. We should be able to prepare different levels of estimates for consideration.

“We already have gotten the first outcome, which is level four. The next outcome will be level three. The final outcome will be level two. Simultaneously, the Engineering, Procurement and Construction, EPC draft contract is being worked on with our lawyer, Templers, and our international counsel, White and Case.

“This is an international transaction and we do our very best to be on top of the project from conception to delivery. UTM is leaving no stone unturned in terms of the quality of companies that will deliver this project.”

Based on ongoing works, he said: “We are looking forward to completing the FEED towards the end of October 2023. In November 2023, we should start work on the Open Book Estimate, OBE, for the EPC contract.

“This kind of project has many intellectual property rights, which cannot be moved from one company to another, so we hope may end up in the EPC contract with JGC and Technic.  Once they finish that, in line with international best practice, they need to also do what we call OBE negotiation with us.

“In that aspect, we also brought in an international engineering company of the same status as JGC and Technic, which is KBR Consulting Limited of the UK to serve as our engineering consultant engineer because we don’t have the requisite experience to measure the deliverables from the outcome of the feed.

“We need to get a company that can ensure that whatever JGC and Technic are doing in terms of engineering is in conformity with the project schedule and expectation.”

He also said: “We have been encouraged by Petroleum Industry Act, PIA, to proceed with the project. The government needs to have political will because implementation is about political will.  Political will is determined by the President or chief executive officers of government agencies responsible for the implementation of the legislation.

“President Bola Tinubu has expressed his commitment to gas development and Nigeria has it in abundance. The president has set the tone and everybody is running based on that direction.

“We never believed that we would have a President with a strong focus on gas. He demonstrated such commitment when we visited him on July 5, 2023. The President promised to every impediment that may stand in our way of delivering this project. Those are strong words and our partners and investors were excited.

“The NNPC Limited is in a joint venture with most of the international oil companies in the country. NNPC is such a thorough organization that before they sanction a project, you would have done a lot of work to show that you believe in the project as a promoter. Once you are able to take your project to a level where NNPC sees value, the company will endorse it. From 2019, when we approached NNPC, to the present, the company has been supporting us.

“Also, the regulators have been supporting the project. Everybody wants the gas to be developed. UTM is doing a lot to deliver Nigeria’s first floating LNG by the special grace of God. We know that gas development is a complex project that also requires huge capital.”

The GMD said: “Things have started moving in the country.  The government has abolished multiple windows of foreign exchange.  This is part of what investors want to see. They want the assurance that if they bring $1 billion into Nigeria that they can take back their money without hindrance.’

“By the special grace of God, more FIDs will be taken, projects will be sanctioned, and the Nigerian oil and gas industry will take its rightful position as number one in Africa. I believe that by the time the cabinet is formed, there will be a competent professional as minister to manage the Ministry of Petroleum Resources and drive down the president’s vision.”

According to him, “The world is moving at a top speed and we need to develop our oil and gas resources as quickly as possible. Remember, Nigeria has an abundance of coal.  But today, the world has moved out of coal and we have a coal sitting in Enugu, another part of the country that has not been developed.

“But South Africa is still making money from coal because its coal has already been developed. But nobody will give us money to develop coal. So, this is why we need to urgently develop our oil and gas resources.

“Also, special attention needs to be given to gas because we have very huge reserves. Look at Qatar. They have done a lot to develop their gas. They pulled out of the Organisation of Petroleum Exporting Countries, OPEC to concentrate on gas. They have done several trains of LNG and petrochemical plants. They have several fertilizer plants. We need to do similar things in Nigeria. Even though I am not a politician, I believe that the political will is there and that will make Nigeria great again.”

✍️ Vanguard