By: Ecofin Agency

Nigeria has cleared a major milestone toward its first liquefied natural gas (LNG) project developed by local companies. On July 8, UTM Floating LNG Limited, a subsidiary of Nigerian energy company UTM Offshore, signed a long-term gas supply agreement with the NNPC/Seplat Energy joint venture.

The agreement was signed in Abuja during the 25th Nigeria Oil and Gas Energy Week. Under its terms, the NNPC/Seplat Energy joint venture will supply 200 million standard cubic feet of gas per day to the UTM FLNG project for 15 years. The gas will come from the Yoho field on oil mining lease OML 104, located offshore Akwa Ibom State in southern Nigeria.

Securing a long-term gas supply is one of the key conditions lenders and investors require before committing to a project of this scale.

According to NNPC Group CEO Bayo Ojulari, the agreement provides the certainty needed to move the UTM FLNG project into the financing, construction and operational phases, while assuring buyers of a reliable LNG supply and giving lenders confidence in its long-term commercial viability.

Julius Rone, CEO of UTM Offshore, described the agreement as a defining milestone for the project. He said it establishes a clear path toward a final investment decision, which is expected in the fourth quarter of 2026. If approved, construction could begin shortly afterward, with the first LNG cargo targeted for 2030.

A $5 billion LNG project led by Nigerian companies

UTM FLNG is Nigeria’s first floating LNG project to be developed and majority-owned by Nigerian companies. UTM Offshore holds a 72% stake, while NNPC owns 20% and the Delta State government holds the remaining 8%.

The ownership structure marks a departure from the country’s previous large-scale gas projects, which have traditionally been led by international oil companies such as Shell and TotalEnergies.

According to official project documents cited by Leadership Nigeria, the facility will have an annual production capacity of 1.8 million tons of LNG. The total investment is estimated at $5 billion, including $2 billion for the first phase and $3 billion for the second. Afreximbank is the lead financier for the first phase, according to comments made by Julius Rone and reported by Billionaires Africa in February. Engineering firms JGC Holdings, Technip Energies and KBR are among the project's technical partners.

As reported by Agence Ecofin in July 2023, NNPC and UTM Offshore signed an initial agreement outlining the project's framework. Less than a year later, in March 2024, UTM Offshore secured all regulatory approvals required for the design and construction phase.