NNPC and TotalEnergys sign $550 million deal to develop U eta gas field – Voice of Nigeria

Nigeria’s National Petroleum Company Limited and TotalEnergys have signed a final investment decision worth $550 million to develop the Ubeta gas field.

Located approximately 80km northwest of Port Harcourt, Rivers State, the OML 58 license covers two fields currently in production: the Obagi oil field and the Ibewa gas and condensate field.

OML 58 gas production is processed at the Obite processing facility and supplied to both the Nigerian domestic gas market and the Nigerian Liquefied Gas and Natural Gas Plant.

Discovered in 1964 in the eastern Niger Delta, the Ubeta field, once operational, will produce approximately 350 MMScf/day of gas and 10,000 BBLS/day of associated liquids, tapping vast gas reserves and contributing to securing gas supplies to NLNG Limited.

At the FID signing ceremony held at the NNPC Towers in Abuja on Thursday, the Group Chief Executive Officer of NNPC Limited, Mele Kyari, said: “We are grateful to the President for supporting us in ensuring an appropriate fiscal environment. The Presidential Executive Order played a key role in achieving this important milestone, and now we are seeing the impact of this policy.”

Senior Vice President, Africa Exploration and Production, TotalEnergys, Mike Sangster said: “Ubeta is the latest in a series of projects developed by TotalEnergys in Nigeria, most recently Ikike and Akpo West.

“I am delighted that we are able to start this new gas project, which has been made possible by the government’s recent incentives for unrelated gas investments. Ubeta fits perfectly into our strategy to develop low-cost and low-emission projects and will contribute to the development of the Nigerian economy through increased NLNG exports.”

Minister of State for Petroleum Resources (Petroleum), Heineken Lokpobiri, has said the government has rekindled investor confidence in the oil and gas industry, assuring Nigerians that more investments are on the cards.

Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo, said the project was a testament to the effectiveness of government policies aimed at creating an enabling environment for investment in the gas sector.

According to the deal partners, the Ubeta gas condensate field in Port Harcourt will be developed using a new six-well cluster connected to the existing Obite facilities via an 11km buried pipeline.

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

Gas from Ubeta will be supplied to NLNG, a liquefaction plant located on Bonny Island that is steadily increasing its capacity from 22 to 30 tonnes per year, in which NNPC holds a 49% stake.

Ubeta is a low-carbon, low-cost development, utilizing existing OML 58 gas processing facilities. The project’s carbon intensity will be further reduced by a 5 MW solar power plant currently under construction at the Obite facility and the electrification of the drilling platform.

TotalEnergys is working closely with NNPC to enhance local content, with over 90 percent of man hours being worked locally.

“The Ubeta FID justifies the effort put in by NNPC, with the unyielding support of its management, to address the root causes that have bedeviled the attractiveness of the Nigerian oil and gas industry to foreign investors in recent years.

“Project Ubeta has a robust Nigerian content plan and has the potential to stimulate economic activity, create employment opportunities and create significant value for stakeholders.” NNPC stated.

Special adviser to the president on energy, Olu Verheijen, said the Ubeta project is a perfect example of the type of investment that the government’s recent reforms are expected to attract.

It stated that 76% of Nigeria’s gas reserves remain underdeveloped, with 50% of them identified as unrelated.

“We have recognized the urgency of closing this gap through our assessment of the Petroleum Industry Act and the new directives signed by President Bola Tinubu to strengthen the PIA.

“Our approach has been to adopt data-driven policies, re-establish Nigeria as a top destination for return on investment and ease of doing business, as well as attract new investments, revive dormant and secure the industry, while creating value for a lasting impact on Nigerians.

“Ubeta’s final investment decision is also in line with Nigeria’s overall energy policy, which emphasizes the development of the gas sector to diversify the country’s energy mix, reduce flaring and promote cleaner energy sources. The project also places great emphasis on gas supplies to the domestic market and the NLNG train no. 7.

“Additionally, this project will deliver sustainable prosperity through strategic and organized economic empowerment of the community. Overall, we are confident that such projects will increase confidence and bring in more investment in the Nigerian oil and gas sector.”Verheijen stated.

She explained that the FID milestone was a confirmation of growing investor confidence in the economy and is in line with recent presidential directives on gas.

According to her, the project highlights a commitment of $550 million to extract 900 billion cubic feet of unrelated natural gas from OML 58, adding that once completed, the Ubeta project will supply 350 million standard cubic feet of gas per day, primarily destined for the domestic market of Nigeria and to increase the operational capacity of NLNG train No. 7.

In December 2023, Tinubu endorsed three presidential initiatives to revitalize investment in Nigeria’s oil and gas sector, resulting in an investment of $550 million.

The directives include initiatives aimed at promoting tax incentives for gas use projects, increasing the competitiveness of local resources and optimizing contracting costs to global standards.