Nigeria to use FLNG for depleting oil field

Nigeria has awarded a licence to install a floating liquefaction (FLNG) unit at its Yoho oil field to domestic infrastructure firm UTM Offshore, Nigerian legal firm Templars — which advised on the deal — said.

UTM is to install a 1.2mn t/yr FLNG unit at the field, under a licence to establish issued by Nigeria's petroleum department.

Yoho, which started crude production in 2003, is due to move into a blow down phase — removing reinjected gas that was used for enhanced oil recovery — in the coming few years as crude output from the depleting resource slows. This gas is expected to be commercialised through liquefaction. ExxonMobil subsidiary MPN holds a 40pc stake and operatorship in the field, while Nigerian state-owned oil company NNPC holds the remaining 60pc.

The FLNG unit will have the capacity to process around 176mn ft³/d of gas from Yoho, Templar noted, which would be sufficient to produce about 1-2 standard-sized LNG cargoes a month. But it remains unclear how much gas could effectively be removed from the resource.

UTM has not said if it will order a new FLNG unit for the Yoho field, or seek an existing unit. There are few FLNG units open in the next few years for new employment within the global LNG market, with most purpose-built for specific extraction and commercialisation projects, such as Australia's Prelude and Malaysia's PFLNG 1 and 2 units.

But Belgian firm Exmar's Tango FLNG is currently out of employment. The unit was installed in Argentina in 2019, but state-owned firm YPF declared force majeure on its charter on the vessel in 2020. The claim was settled last year, at a cost of around $150mn for YPF, with the unit remaining berthed at Uruguay's Nueva Palmira port in recent months, and available for new employment. The unit has a capacity of 500,000 t/yr — much smaller than the 1.2mn t/yr capacity that UTM is seeking to install at Yoho.

Crude loadings at Yoho's floating storage and offloading unit averaged around 35,000 b/d in 2020.

By Samuel Good