Nigeria’s first $5b FLNG project to reduce gas-flaring, boost domestic LPG

Group Managing Director/Chief Executive Officer, UTM Offshore Limited, Julius Rone, has said the completion of Nigeria’s first $5 billion Floating Liquefied Natural Gas (FLNG) project will significantly reduce gas flaring while boosting the domestic supply of Liquefied Petroleum Gas (LPG). He stressed that the project would address the country’s energy demand, which requires over two million tonnes of LPG for domestic consumption.

Rone mentioned that the impact would go beyond Nigeria, as an off-taker is discussing the possibility of taking LNG to South Africa. “By the special grace of God, this would be the flagship project to open up that space for stranded gas offshore to be monetised through a technology that has been broken,” he said.
He added that over 1.5 million tonnes were imported from the global market; hence, the supply of LPG in naira would enhance the value of the local currency.

“The project would enhance domestic supply, reduce importation and conserve foreign exchange. Also, it will reduce transportation costs because of the proximity to the market, which will sufficiently reduce the price of LPG in the country,” he said.

He, however, revealed that approval for the licence to embark on the project had been received from the Nigerian Downstream and Midstream Petroleum Regulatory Authority (NMDPRA), which was presented by the Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo.

“We are working towards taking the Final Investment Decision (FID); it will be taken soon. One of the conditions for the FID is the Sales and Purchase Agreement (SPA). We have a potential off-taker of international standards that will off-take the product to Europe and other parts of the world. We had a meeting with them in New York. We look forward to announcing the FID soon. We are very pleased with the level of aggregation of the debt and equity being arranged by the bank,” he said.

He stressed that conquering energy poverty had to start in Nigeria before moving to other African countries, as Africa is in complete deficit.He urged African governments to play their part, so investors can come in because governments alone could not take the continent out of energy poverty.

Rone stated: “The government must provide attractive physical incentives for public and private partnership. It should provide access to funding. Then, there should be an assurance of free entry and exit, meaning that investors who come to Africa can also take their investments out, if they want, without any hindrance.

“No investor wants to tie their monies down. African countries must simplify their regulatory approval processes to encourage investments. Also, there should not be double taxation. All investors want to be sure of the number of taxes they will pay. It should be part of their financial models. Bringing up new taxes later usually affects planning, execution and payment of dividends to shareholders.”