A model of FLNG

Sopuruchi Onwuka

The domestic supply of the liquefied petroleum gas (LPG), also called cooking gas, will significantly improve when the country’s first floating liquefaction company begins production in 2028.

The Group Managing Director/Chief Executive Officer of UTM FLNG Limited, Dr Julius Rone, has pledged that the company would fill supply gaps in the domestic market with significant 500,000 tons per annum (ktpa) of the clean kitchen fuel.

Dr Rone who spoke with industry reporters at the just concluded Africa Energy Week (AEW) in Cape Town, South Africa, stated that with dedication of full LPG output from its plants, the company would assist weed out import related costs and arrest the galloping prices of LPG for homes and small businesses in the country.

Group Managing Director/Chief Executive Officer of UTM FLNG Ltd, Dr Julius Rone

 

He pledged to bring changes in the domestic LPG where prices have consistently jumped as government’s penetration programmes trigger demand surge for the product.

The Oracle Today reports that government has as part of the broader reforms in the petroleum industry initiated programmes that target diversification of fuel products for various applications in the country. The programmes including the national autogas policy, LPG penetration programme, and many others are conceived to optimize the value of the nation’s gas resources, attain energy sufficiency, displace dirty fuel with cleaner gas products, and also reduce demand pressure on refined petroleum fuels.

Expectedly, the LPG penetration programme which is now accelerated under the Decade of Gas initiative has triggered acute demand pressure on the domestic market and sparked price jumps as marketers embark on massive imports at a time of acute foreign exchange crunch in the country.

According to industry statistics, Nigeria currently demands over 2.0 million tons of LPG per annum but local production capacity from the Nigerian Liquefied Natural Gas (NLNG) Limited and a number of smaller players has been unable to meet rising local demand.

Marketers in the domestic LPG play have since resorted to bridge the supply gap with high cost importation which is currently exacerbated by low value of the Naira in the foreign exchange market.

The impact on retail market has been jumps in prices, a situation that threatens the government’s prevailing gas penetration programmes.

Thus, controlling high prices in the domestic LPG market has proved impossible due to worsening value of the Naira at foreign exchange market as high cost of imports escalates.

Dr Rone stated that the high prices of cooking gas in the domestic market would be tamed when the company’s first floating liquefaction plant comes online in 2028.

He said UTM FLNG Limited would not only supplement supply from the NLNG, but would also sell to the domestic market in Naira in order to address import dependence, foreign exchange adversity and overall cost escalation.

The Oracle Today reports that UTM FLNG Limited drives the country’s first floating gas liquefaction and export project in collaboration with the Nigerian National Petroleum Company (NNPC) Limited and Delta State government.

UTM Floating Liquefied Natural Gas (FLNG) Limited, JGC Corporation, Technip Energies and Kellogg Brown & Root (KBR) signed a Front-End Engineering Design (FEED) contract for the development of Nigeria’s first Floating Liquefied Natural Gas (FLNG) facility on November 16 in London.

According to Rone, the FLNG model is a quick to market option for small offshore fields and nearshore terminals in areas lacking existing infrastructure, facilities and especially pipelines. He stated that Nigeria currently needs a flexdible and modular FLNG model that could be replicated across locations without reverting to the drawing boards for new FEEDs.

Relating the project to Nigeria’s domestic needs, Dr Rone pledged that total LPG output from the floating processing plant would be exclusively sold to the domestic market and in local currency to help curb high cost importation.

Selling in Naira, he noted, would also removed pressure on the nation’s lean foreign reserves, crash prices of the product by eliminating import related experiences, and also enhance affordability of the product as key instrument for the government’s LPG penetration programme.

In projecting the full range economic value of the project, he said the FLNG model would enable government access and commercialize stranded gas in the nation’s shallow water and deep water oilfields.

He explained that the concept which would be proved with the Yoho shallow water oilfields would be subsequently replicated in other oilfields where the NNPC Limited has controlling joint venture stake.

As more projects come on stream, he said, more values would continue to be created for stakeholders, the market and domestic consumers of LPG.

Dr Rone said the LNG output from the offshore plant would be exported by the company.