Nigeria's oil regulator, on Friday, gave UTM Offshore Limited a license to run the country’s first floating liquefied natural gas (LNG) plant. This plant will capture gas that is currently being flared, or burned off, from an ExxonMobil oil field in the Niger Delta.

Nigeria has huge gas reserves, estimated at over 209 trillion cubic feet. However, the country loses more than $1 billion each year because of gas flaring. Gas flaring happens when natural gas from oil fields is burned off rather than being collected and used, leading to significant financial losses and environmental harm.

The new floating LNG plant, which is a large vessel owned by UTM, will process gas from ExxonMobil’s Oil Mining Lease 104, also known as the Yoho field. This oil field is located offshore in Akwa Ibom, a state in southern Nigeria. The plant is capable of processing 2.8 million tons of gas per year.

This project represents a significant step for Nigeria as it works to reduce gas flaring and make better use of its natural gas resources. It also highlights a growing trend across Africa to develop infrastructure that can capture and utilize gas that would otherwise be wasted.

Farouk Ahmed, the head of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), announced that the floating liquefied natural gas (LNG) plant recently licensed to UTM Offshore Limited will have an increased capacity. Initially planned to process 1.2 million tons per annum (MTPA) of gas, the plant's capacity has been upgraded to 2.8 MTPA. This adjustment reflects the growing global demand for LNG, which has prompted the need for a larger processing capacity.

According to Julius Rone, CEO of UTM Offshore, the engineering work for this ambitious project is scheduled to be completed by 2028. The construction and technical setup will take several years to finalize, ensuring that the plant meets all operational standards and requirements. Production from the facility is expected to commence in the first quarter of 2029. This timeline aligns with the industry’s standard development phases, including detailed engineering, construction, and testing.

"This is just the engineering phase, and there are other variables. So it is not possible to give you the cost, but it is a multibillion dollar project."

He mentioned that the plant will supply 500,000 metric tons of liquefied petroleum gas for the home market; the LNG will be exported.

Afreximbank committed to funding the second phase of construction with $3 billion and provided $2.1 billion for the first.