UTM, Nigerian firm, to build Africa’s first floating LNG with Afreximbank finance

BY Maduabuchi Efegadi.

UTM, a Nigerian offshore firm, has secured African Export-Import Bank’s (Afreximbank) project preparation facility financing to build Africa’s first Floating Liquefied Natural Gas (FLNG) facility with an LNG production capacity of 1.2 million metric tonnes per annum, and a storage capacity of 200,000 cubic metres of gas.

Under the terms, Afreximbank will part-finance activities designed to progress the FNLG project to be located 60 km offshore Akwa Ibom State, Nigeria. During the pre-investment stage, the project preparation facility (PPF) will be deployed to de-risk the project and rapidly progress it towards bankability.

Additionally, the bank will be appointed as mandated lead arranger (MLA) and lead in syndicating the debt raise – with the ability to incorporate credit enhancements, if required. Through its Financial Advisory Mandate, Afreximbank has been playing an instrumental role in structuring the transaction to ensure optimal returns and debt sizing, as well as identifying equity investors to invest in the project on favourable terms.

The deal boosts UTM’s fundraising efforts to secure the necessary investment required for the projects’ implementation. The total cost of the gas liquefaction project was not immediately known by this newspaper.

But according to experts knowledgeable in the gas value chain, the project is of historical significance as it is the first FNLG project developed by an African-owned company on the continent.

UTM is carrying out the development, design, and construction of the 1.2 million metric tonnes per annum capacity Floating Liquefied Natural Gas facility, with a storage capacity of 200,000 cubic metres, and ancillary facilities.

Amr Kamel, Afreximbank’s executive vice-president in charge of business development and corporate banking, said the project, being the first African-led intervention in the FNLG sector, aligns with the bank’s strategic aim of advancing activities which boost strong climate finance credentials.

Those conversant with the climate change campaign adduce that the project paves way for Nigeria for a just energy transition in line with the carbon emissions reduction as prescribed at COP26. Development economists see the project’s economic transformative potential–establishing trade-enabling infrastructure that will allow Nigeria to pivot from a crude oil export-based economy to a gas-based processing industrial economy, in turn unlocking significant development impacts.

Afreximbank said it is leveraging its diverse product suite to provide end-to-end solutions to advance the project’s timely implementation.

Kamel said Afreximbank’s intervention in the UTM pioneering FLNG will help Nigeria to invest in natural gas as part of its pathway towards a just energy transition and achieve a more sustainable and climate resilient economic development.