NNPC, TotalEnergies sign $550m gas production deal

• Published On: 21 June 2024 at 20:15

TotalEnergies, the operator of Nigeria's Oil Mining Lease 58 onshore licence with a 40% interest, and Nigerian National Petroleum Company Limited (60%) signed a $550 million Final Investment Decision on Thursday for the development of the Ubeta gas field.

The OML 58 licence, located approximately 80 kilometres northwest of Port Harcourt in Rivers State, has two fields that are now in production: the Obagi oil field and the Ibewa gas and condensate field.

The Obite treatment centre processes OML 58 gas production, which is then delivered to both the Nigerian domestic gas market and the Nigeria Liquefied and Natural Gas plant.

The Ubeta field, discovered in 1964 in the eastern portion of the Niger Delta, will, once operational, generate around 350MMScf/day of gas and 10,000 BBLS/day of related liquids, tapping into massive gas reserves and adding to NLNG Limited's gas supply.

Mele Kyari, Group Chief Executive Officer of NNPC Limited, stated at the FID signing event held on Thursday at the NNPC Towers in Abuja, "We appreciate Mr President for providing us with the necessary fiscal environment. The Presidential Executive Order helped us reach this critical milestone, and we are already experiencing the impact of the policy."

Mike Sangster, Senior Vice President of Africa, Exploration & Production at TotalEnergies, stated that "Ubeta is the latest in a series of projects developed by TotalEnergies in Nigeria, most recently Ikike and Akpo West."

"I am delighted that we can begin this new gas project, made feasible by the government's recent incentives for non-associated gas operations. Ubeta is ideally aligned with our aim of creating low-cost, low-emission projects, and would benefit the Nigerian economy by increasing NLNG exports."

The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, stated that the government has restored investor trust in the oil and gas business, promising Nigerians that more investments are on the way.

Ekperikpe Ekpo, Minister of State for Petroleum Resources (Gas), said the initiative demonstrates the effectiveness of the government's policies targeted at encouraging investment in the gas sector.

According to the deal's partners, the Ubeta gas condensate field in Port Harcourt would be developed with a new six-well cluster connected to the existing Obite facilities by an 11-kilometre subterranean pipeline.

Production is projected to begin in 2027, with a plateau of 300 million cubic feet per day (about 70,000 barrels of oil equivalent per day including condensates).

Gas from Ubeta will be supplied to NLNG, a liquefaction plant on Bonny Island that is currently expanding its capacity from 22 to 30 metric tonnes per year and in which NNPC owns a 49 percent interest.

Ubeta is a low-emission, low-cost venture that takes advantage of OML's 58 existing gas processing facilities. The project's carbon intensity will be further decreased by a 5MW solar plant now under development at the Obite site, as well as the electrification of the drilling rig.

TotalEnergies is collaborating closely with NNPC to improve local content, with more than 90 percent of man-hours being performed locally.


"The Ubeta FID justifies NNPC's unwavering executive support in addressing the underlying problems that have hampered the attractiveness of Nigeria's oil and gas industry to foreign investors in recent years.

"The Ubeta project has a robust Nigerian content plan and is poised to stimulate economic activities, create job opportunities, and create significant value for stakeholders," according to the NNPC.

Olu Verheijen, Special Adviser to the President on Energy, stated that the Ubeta project exemplifies the type of investment that the government's recent reforms seek to attract.

She added that 76% of Nigeria's gas reserves remained untapped, with 50% classified as non-associated has.

"We recognised the importance of closing this gap through our review of the Petroleum Industry Act and the new directives signed by President Bola Tinubu to strengthen the PIA."

"Our strategy was to respond with data-driven policies, reclaiming Nigeria's position as a top destination for returns on investment and ease of doing business, as well as attracting new investments, revitalising dormant ones, and safeguarding the industry while creating value for long-term impact for Nigerians.

"The Ubeta Final Investment Decision is also consistent with Nigeria's general energy policy, which focuses on the expansion of the gas industry to diversify the country's energy mix, reduce flaring, and encourage cleaner energy sources. The project also places a high priority on selling gas to the local market and NLNG train 7.

"In addition, this project will offer long-term prosperity to communities through purposeful and structured economic empowerment. Overall, we believe that projects like these will enhance trust and attract additional investment to Nigeria's oil and gas sector', Verheijen remarked.

She explained that the milestone FID was a statement of increased investor confidence in the economy and was consistent with the recent Presidential Directive on Gas.

According to her, the project includes a $550 million commitment to extract 900 billion cubic feet of non-associated natural gas from OML 58. Once completed, the Ubeta project will provide 350 million standard cubic feet per day of gas, primarily for Nigeria's domestic market and to supplement the operational capacity of NLNG Train 7.

Tinubu supported three presidential initiatives to revive investment in Nigeria's oil and gas sector, which resulted in this $550 million investment.

The directions include attempts to increase fiscal incentives for gas utilisation projects, improve the competitiveness of local content, and reduce contracting costs to global norms.