Nigeria's UTM secures a gas supply agreement, clearing a key obstacle to achieving $3 billion LNG project

UTM Offshore, Nigeria, announced on Tuesday that it had signed a 15-year agreement for gas supply. This removes a major hurdle to the final investment decision of its $3 billion floating liquefied natural?gas project. The decision is now expected in fourth quarter, after several delays.

According to the agreement, a joint-venture between Nigeria's NNPC Ltd, a state-owned company, and Seplat Energy Producing Nigeria Unlimited, an independent company, will supply 200 millions standard cubic feet (5.7 m3 cubic metres) per day of gas to the UTM FLNG project. The project is designed to produce 1.8 m3 cubic meters of LNG each year using?gas sourced in the Yoho Field.

At the signing ceremony, UTM Offshore's Chief Executive Julius Rone stated that the agreement would establish a long-term framework for feed gas financing and construction.

Rone stated that the agreement will provide certainty to investors, lenders and buyers of LNG and will position the project in a way for it to be finalized for investment decisions during the fourth quarter 2026.

The government of Nigeria is seeking to monetize large amounts of stranded natural gas reserves, and increase LNG exports.

Nigeria has some of Africa's biggest gas reserves, but it has struggled to convert them into exports or domestic industrial use due to funding constraints, infrastructure gaps, and regulatory uncertainty.

According to UTM, JGC and Technip Energies completed the front-end engineering and designing of the project in 2023. (Reporting and editing by Andrei Khalip, with Isaac Anyaogu)

(source: Reuters)