A new opening for African gas

Nigeria

Julius D. Rone, group managing director and CEO of UTM Offshore, talks to The Energy Year about progress under Nigeria’s Decade of Gas initiative and how shifting energy-security priorities are creating opportunities for African energy investments.

UTM Offshore is a Nigerian provider of maritime and offshore logistics services to the oil and gas sector.

• Global concerns about energy security are creating marketing opportunities for African hydrocarbons, as buyers and investors look beyond traditional supply centres and reassess Africa’s role in serving Europe and Asia.
• Africa’s gas projects are becoming more attractive as supply diversification rises in importance, but governments will need to liberalise activity and create bankable frameworks to convert resource potential into production.
• The success of LNG and FLNG projects in Nigeria and elsewhere in Africa will depend on securing long-term offtake and international financing, while balancing export revenues with commitments to supply gas for domestic consumption.

We are now in the midst of the Decade of Gas programme in Nigeria. What is your assessment of its implementation to date?
The government wants to position gas as Nigeria’s key fuel for economic development, and the initiative has been going on well, especially since President Bola Tinubu came into office.
President Tinubu has brought vigour to resolving legacy issues in Nigeria’s oil and gas sector and moving investments forward with incentives and executive orders. He has also appointed a new Special Adviser on Oil and Gas with powers to supervise and co-ordinate agencies and regulators.
From our engagements with the relevant bodies, I believe they are on the right track. They have been following all major gas projects, identifying issues and asking what support is required from the government to make projects bankable and progress to FIDs and timely execution.
With the government’s mediation, the World Bank, IMF, IFC, project sponsors and international finance groups recently convened in Nigeria to discuss project financing matters. That is exactly the kind of practical steps the sector needs.

How are geopolitical tensions in the Middle East affecting Nigeria’s and Africa’s upstream?
Before the war between Russia and Ukraine, Russian gas reached Europe through pipelines. That flow was cut off. With the ongoing US-Israeli war in Iran, approximately 20% of the global oil supply has been impacted. The world has realised it needs to diversify its energy sources, and the focus is shifting to Africa.
Nigeria is in a good position to benefit from this shift. It is one of Africa’s largest energy players, and already we are seeing major international companies returning, reaching FIDs and making commitments to develop resources that had been sitting idle for several years.
Africa is in a good geographical location to supply Europe and Asia, and the continent is now seen as a pillar of energy security in many different parts of the world. Even Qatar is looking to Africa as a backup for supplies to its customers. This is Africa’s time, and governments must liberalise activity so the investments required to bring hydrocarbons to the surface can be made.

Mozambique, Senegal and Mauritania are accelerating LNG development. Where does Nigeria stand in this context, and what is the status of your FLNG project?
The Tinubu administration is business-focused and is seizing the moment to create the necessary investment frameworks and incentives. Legacy issues are being resolved, such as the OPL 245 dispute involving Shell and Eni, and the government is creating an atmosphere that is encouraging international companies to participate in the tenders that are being prepared for projects that need to move forward.
Developing LNG is complicated, and FLNG projects are even more so. UTM Offshore announced that construction of our FLNG vessel would begin in 2026, and we have been able to reach this stage thanks to strong support from the administration and other stakeholders who believe in gas development.
We have completed the engineering designs and are in pre-construction. The project now has three key milestones to achieve: the GSA [gas supply agreement], the SPA [sales and purchase agreement] and the FID. We hope to sign the GSA in Q2 2026, and we have made good progress on the SPA negotiations, agreeing to heads of terms with our offtaker.
Debt financing is in place with Afreximbank. The debt tranche is fully subscribed, but lenders are still asking to join the syndication. On the equity side, we have secured commitments from NNPCL, the Delta State Government and other investors.
In the meantime, we are procuring long-lead items. We have secured a shipyard slot for the hull and are discussing rotating equipment with Baker Hughes. The EPCIC contract is being reviewed with JGC Holdings and Technip Energies, with KBR acting as owner’s engineer. JGC has also announced a technology partnership with Honeywell that could save 12 months in construction, so our 2030 target for shipping our first cargo might be achieved much earlier.

How do you expect to balance the production of LNG for export and LPG for domestic consumption?
To back a project, lenders need to see a clear path to returns on their investment. LNG exports are key to that. As far as LPG goes, Nigeria’s internal requirement is probably upwards of 2 million tonnes per year (tpy), and there are reports that it will not be met because households are moving away from firewood for cooking and burning more gas.
We have agreed with our offtakers that 300,000 tpy of LPG must be channelled to support Nigerian demand. It will reduce our foreign currency pressure, but more importantly, it is a commitment to support the government’s push for the use of cleaner fuels by households and industry.

What is your vision for UTM beyond the FLNG project?
In gas, we have found our niche. We have built a track record with international partners and financiers that we believe we can leverage to bring Africa’s abundant gas resources to the surface.
Our current FLNG project is the first of several that we want to pursue in Nigeria and elsewhere in Africa. We want to lead Africa’s gas sector as an indigenous Nigerian company, using local talent and proven technologies, and eventually grow in generation through investments in floating power barges that can convert offshore gas into electricity for nearby industries.

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