Nigeria's UTM secures gas supply deal, clears key hurdle to $3 billion LNG project

Nigeria's UTM Offshore said on Tuesday it had secured a 15-year gas supply agreement, removing a ​major obstacle to a final investment decision on its $3 ‌billion floating liquefied natural gas (FLNG) project, now expected in the fourth quarter after delays.

Under the agreement, a joint venture between Nigeria's state-owned NNPC Ltd and ​independent Seplat Energy Producing Nigeria Unlimited will supply 200 ​million standard cubic feet (5.7 million cubic metres) of gas ⁠per day to the UTM FLNG project, designed to produce ​1.8 million tonnes of LNG per year from gas sourced from ​the Yoho field.

"The execution of this agreement establishes the long-term feed gas framework needed to advance project financing, construction and operations," UTM Offshore Chief ​Executive Julius Rone said at the signing ceremony in Abuja.

Rone ​said the agreement would provide certainty for investors, lenders and LNG buyers and ‌position ⁠the project for a final investment decision in the fourth quarter of 2026.

The project, in which NNPC holds a 20% stake, UTM Offshore 72% and Delta state government 8%, received Nigeria's ​first licence for ​a floating LNG ⁠export facility in 2024 as the government seeks to monetise large volumes of stranded gas reserves ​and expand LNG exports.

Nigeria holds some of Africa's ​largest ⁠gas reserves but has struggled for decades to convert much of the resource into commercial exports and domestic industrial use because of ⁠funding ​constraints, infrastructure gaps and regulatory uncertainty.

Front-end engineering ​and design of the project was completed in 2023 by JGC and Technip ​Energies, according to UTM.

By Isaac Anyaogu, Reuters