Nigeria’s NNPC Ltd and Golar LNG announce new FLNG project

In a significant move towards harnessing Nigeria’s abundant natural gas reserves, state-owned NNPC Limited has forged a Project Development Agreement (PDA) with Golar LNG for the establishment of a Floating Liquefied Natural Gas (LNG) facility off the shores of the Niger Delta.

Both companies have been in discussions around the launch of FLNG ventures for several months, having already signed a Memorandum of Understand and Heads of Terms for that purpose.

The PDA was signed on June10th, 2024 in the presence of NNPC Limited’s key executives including Chief Financial Officer Umar Ajiya, Executive Vice President for Gas Power & New Energy Olalekan Ogunleye, and Executive Vice President for Upstream Mrs. Oritsemeyiwa Eyesan, alongside Golar LNG’s CEO Karl Fredrik Staubo.

This collaboration represents a significant stride towards commercializing Nigeria’s gas resources, aligning with President Bola Ahmed Tinubu’s vision to expedite the economic exploitation of Nigeria’s gas assets.

The agreement is poised to tap into the extensive proven gas reserves from shallow water resources off the Nigerian coast. The PDA delineates a comprehensive plan for monetization, leveraging approximately 400-500 million standard cubic feet per day (MMscf/d) to produce LNG, LPG, and Condensate.

Both NNPC Limited and Golar LNG have underscored their dedication to achieving a Final Investment Decision (FID) by the close of Q4, 2024, with the aim of commencing gas production by 2027.

Golar LNG Limited, recognized as a leading independent owner and operator of LNG infrastructure, brings its expertise in managing LNG carriers, floating storage and regasification units (FSRUs), and floating liquefaction (FLNG) vessels to this ambitious venture.

The project would be the first FLNG carried by NNPC in Nigeria and follows several such ventures currently under development by the private sector, the most advanced of which is the UTM FLNG.

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Private sector steps up efforts to expand Nigeria’s downstream gas infrastructure

Nigeria’s private sector is driving the expansion of the country’s downstream gas infrastructure in partnership with state-owned NNPC Ltd, with companies like Tetracore Energy Group and Axxela recently launching new compressed natural gas (CNG) and liquefied natural gas (LNG) facilities. Tetracore Energy Group has commissioned a new CNG facility in Ogun State, with a capacity of 3.1 million standard cubic feet per day (mmscf/d). The facility will support gas availability along Nigeria’s Western-Southern corridor, where some of the country’s biggest industrial clusters are located. The facility is expandable to 6.2 mmscf/d, providing room for expansion as demand for gas grows. In addition, Tetracore broke ground on a small-scale LNG plant, which will supply gas to industrial and power customers in Nigeria’s Southwest, South-South, Southeast, and Northern markets. “Tetracore is investing approximately $40 million into the future LNG plant where we are breaking ground today, with commissioning expected at the same time next year,” CEO of Tetracore Energy Group, Kunle Williams, said during a grand ceremony in Ogun State on June 7th. Last week, NNPC and Axela commissioned a CNG plant in Lagos, with a capacity to deliver 5.2 mmscf/d of gas per day, serving around 3,700 cars daily and supplying gas to industries and other companies. The partners also announced plans to build six additional CNG service plants to expand access to alternative fuel for cars and industries. Tetracore and Axxela are representative of increased private sector participation within Nigeria’s midstream and downstream gas space. Seplat Energy, one of the country’s leading independent operators, is currently commissioning the 300 MMscf/d ANOH gas plant, while NIPCO Gas and NNPC have agreed last year to invest in the development of several CNG stations across the country,. The private sector’s investment in gas infrastructure is crucial for Nigeria’s energy and industrialization landscape, as it enables the efficient utilization of natural gas for various sectors, including transportation, power generation, and industrial applications. Nigeria is pivoting toward natural gas as an alternative fuel after eliminating a widely used but expensive petrol subsidy, resulting in a sharp increase in pump prices. The government aims to reduce costs and promote clean energy adoption in Africa’s leading oil-exporting nation by transitioning to gas.