The Federal Government has applauded the UTM Offshore Limited and its technical partners on agreements for the commencement of Front End Engineering Design (FEED) for Nigeria’s first Floating Liquefied Natural Gas (FLNG) facility.
The agreements, which involved three technical partners namely: Kellogg Brown and Root (KBR), UK, Japan Gas Corporation (JGC), and TechnipEnergies Limited, were signed at a brief event at the Hilton Park Lane, London, UK.
This is contained in a statement by Horatius Egua, Senior Adviser, Media and Communications to the Minister of State for Petroleum Resources, Chief Timipre Sylva, in Abuja.
The statement quoted Sylva, who spoke during the FEED contract signing, as commending the pioneering efforts of UTM Offshore Ltd management.
He said the Federal Government would continue to support and create enabling environment for business investments in the country, especially in gas development.
The FEED contract with the three firms essentially entails conducting for UTM Offshore Ltd, various studies to figure out technical issues and estimate investment cost for the FLNG facility prior to the Engineering, Procurement and Construction (EPC) phase.
The time line for this phase of the FLNG project is 10 months.
The FEED contract signing is a follow up to the successful execution of the pre-FEED agreement between UTM Offshore Ltd with JGC, a leading International Engineering Design, Procurement and Construction firm.
The pre-FEED scope was completed within four months from commencement date. KBR provided due diligence on the JGC scope by conducting a third-party review of all deliverables from JGC during the Pre-FEED.
UTM Offshore Ltd entered into the pre-FEED agreement with JGC and KBR in May 2021.
While reiterating government’s determination to leverage on natural gas as the nation’s transition fuel with Floating LNG Technology as the game changer, Sylva said the Petroleum Industry Act was improving the industry’s reputation, paving the way for investments, jobs, economic diversification and strengthening ability to fulfil world’s energy demand.
We have already proclaimed that gas is our transition fuel and a destination fuel, and we anticipate that it will be a major component of our energy mix by the year 2060,” he said.
He said the UTM FLNG would target the processing of associated gas currently flared to cut carbon emissions and monetise additional reserves for domestic and global markets, which aligned with Nigeria Gas Flare Commercialisation Programme (NGFCP) and the decade of gas agenda.
“There are generous incentives to enable development, distribution, penetration and utilisation of gas.
“This is why the UTM Offshore project will involve the development and financing of a 1.52 Million Tonnes Per Annum (MTPA) FLNG facility with a capacity to process 176 million standard cubic feet of natural gas per day and condensate,” he said.
The Managing Director and Chief Executive Officer of UTM Offshore Ltd, Mr Julius Rone said like most other nations of the world, Nigeria was keen on, and working assiduously towards achieving energy transition.
“At UTM Offshore, we completely agree with President Muhammadu Buhari that given Nigeria’s potential of about 600 trillion cubic feet of gas, the commodity has the enormous potential to diversify our country’s economy.
“We also agree that the rising global demand for cleaner energy sources has offered Nigeria an opportunity to exploit gas resources for the good of the country,” he said.
Rone disclosed that UTM Offshore is impressed with JGC’s handling of the pre-FEED component of the FLNG project, hence the resolve to reengage the firm for the main FEED phase.
The statement also quoted the President of African Export Import Bank (AfreximBank), Prof. Benedict Oramah, as lauding the transparent pursuit of the FLNG project by UTM Offshore Ltd, and pledged the full backing of the bank for the FLNG project.
Oramah, however, said the intervention of the President in optimising the utilisation of Nigeria’s gas resources came at a time when the traditional (multinational) investors in oil-gas initiatives decided to stop funding oil and gas operations in Africa due to climate change.
“We are not going to keep waiting for multinationals to help us harness our wealth. AfreximBank is supporting the FLNG project in Nigeria because we have seen that UTM offshore Ltd. is serious.
“In December 2021; UTM Offshore Ltd and AfreximBank signed a five billion dollars Memorandum of Understanding (MoU) for the financing of the UTM FLNG.
“The UTM FLNG is one of the projects AfreximBank is very proud of; just like the Dangote refinery. We are proud to be associated with these two projects in Nigeria,” he said.
UTM Offshore Ltd is pioneering the development of the FLNG facility in collaboration with LNG Investment Management Services (LIMS), a subsidiary of Nigeria National Petroleum Corporation Limited (NNPC Ltd).
The facility, a newly built vessel, will receive gas feedstock from an existing offshore facility, treat it to required LNG standard, liquefy the gas, store the LNG and offload to LNG carriers.
When completed, the floating LNG shall have an LNG production capacity of 1.2 mmtpa, Turret and Mooring System, Gas pre-treatment modules, LNG production modules, living quarters, self-contained power generation and utilities as well as capacities for LNG storage and offloading.
DAPPMAN Raises Concern Over FG’s New Tax Regime
The Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) has expressed concern over the new 0.5 per cent tax on gross turnover of the petroleum marketing firms proposed by the Federal Government.
Executive Secretary, DAPPMAN, Mr Olufemi Adewole, said at the maiden edition of the Platforms Africa Continental Forum in Lagos, that the tax would put many firms out of business.
Adewole said there were indications that fuel distribution crisis may soon hit the country, if the government implemented the new tax regime.
He was emphatic that more than half of the fuel marketing firms in Nigeria would close down, if the tax burden was slammed on them.
According to him, the imminent closure of businesses poses threat to the smooth distribution of petroleum products across the country.
“The petroleum marketing firms’ trading margin is too small that they cannot pay such amount sustainably.
“Petroleum marketers operate a very low margin but the turnover is very huge. Unfortunately the margin does not correspond with the turnover,” said Adewole.
He added that the margins they made when fuel sold at N40 per litre was the same when the price rose to N160 per litre and N200 per litre respectively.
According to him, “The Finance Act 2020 says the marketers have to pay 0.5 per cent from their gross turnover by the end of this year.
“It is unimaginable that probably half of the petroleum marketing firms existing now may go under, if the new tax regime is implemented.
“Except the regulator which is Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) approves a new margin for the marketers.”
He said the association had called on government to give petroleum marketers access to foreign exchange at the official Central Bank of Nigeria (CBN) rate to enhance the supply and distribution of Premium Motor Spirit (PMS) across the nation this yuletide season.
According to DAPPMAN, shortage of foreign exchange (forex) coupled with several unauthorised levies, bad roads are among the factors making fuel importation and distribution burdensome for members.
The Tide source reports that the fuel marketers recently bemoaned the acute scarcity of forex in the official market, which is currently threatening the importation, distribution and impacting deeply on prices of petroleum products across the country.
Niger Wants NNPCL To Establish Truck Transit Parks
Niger State Government has urged the Nigerian National Petroleum Company Ltd. (NNPCL) to establish truck transit parks in some strategic parts of the state to reduce traffic on highways.
The government identified towns such as Tafa, Suleja, Mokwa, Bida, Tegina, Lambata and Minna as major areas to be given attention in that regard.
The Permanent Secretary in the Ministry of Mineral Resources in Niger State, Alhaji Abubakar Idris, made the call during the meeting of National Council on Hydrocarbons organised by the Ministry of Petroleum Resources in collaboration with the State Government.
According to him, the establishment of the parks in the identified areas will reduce traffic on highways and generate revenue for the state and country at large.
In the meeting entitled: “Roadmap and Strategic Option towards achieving energy transition in Nigeria”, Idris presented a memorandum from the State Government to the council on the need for the establishment of the transit parks.
He explained that it would also create a partnership between the state and federal government to reduce the negative effects of heavy road traffic on highways.
He explained further that the trucking industry was indispensable to the Nigerian economy as “truckers are responsible for delivering fuel from depots to filling stations where they are dispensed.
“For these reasons, funds need to be released to build truck parks for ease of operations”, he said.
He also called for the establishment of a frontier basin development commission with its headquarters in Niger State.
According to him, the establishment of the commission will expedite the effective implementation of Petroleum Host Community Trust Fund and frontier basin exploration fund as captured in the Petroleum Industry Act 2021 with headquarters in Niger.
He said Nigeria’s frontier basins consist of Anambra basin, the lower, middle and upper Benue trough, the South eastern sector of the Chad basin, the Mid-Niger (Bida) basin and Sokoto basin.
According to him, the basins would be better positioned for the opportunities in the hydrocarbons natural gas, oil and other minerals.
He noted that the establishment of frontier basin development commission would offer greater opportunities to actualise the state dream of oil and gas economic value-chain and industrialisation in Nigerian frontier basins.
Motorists Groan Over Fuel Scarcity
Long queues resurfaced in Lagos as motorists spent hours at filling stations to buy Premium Motor Spirit (PMS), popularly known as petrol.
The situation was worse on Ikorodu Road, Maryland, Ikeja, Anthony, Bariga, Ilupeju and Gbagada areas as motorists were agitated for spending hours on queues.
The Tide source reports that the development left commuters stranded with gridlocks in major areas of Lagos as motorists queued to buy the product.
The source also reports that only filling stations owned by Major Oil Marketers Association of Nigeria (MOMAN) had petrol and sell at the regulated price of N170 per litre.
Some stations owned by Independent Petroleum Marketers Association of Nigeria (IPMAN) sell between N200 and N210 respectively.
A motorist, who identified himself as Mr Foluso Saliu, told the source that he had been on the queue since 6.30 a.m. hoping to get fuel and return to work.
He said government should find a lasting solution to petrol supply in Lagos to avoid panic-buying.
“Scarcity has been frequent during the ember months and l hope it will be addressed,” he said.
Another motorist, Mr Julius Albert, urged filling stations to avoid selling petrol in jerry cans to allow vehicles to buy on time.
Albert appealed to the government to fully deregulate the downstream sector of the petroleum industry if that was the solution to availability of petrol without stress.
According to him, the product seems to be available in some filling stations but they choose to hoard it and sell at higher prices.
Queues were seen at Mobil, NNPC, Conoil, Oando and Nipco filling stations on Ikorodu Road.
Also, queues were cited at TotalEnergies, TMAAC on Bank Anthony Road and Conoil, opposite LASUTH.
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