Nigeria Targets $11.4Bn Proceed From UTM Offshore FLNG Project

UTM Offshore, Afreximbank Sign $11.4Bn Financing Deal - Market News Nigeria

Richard Ginika Izuora

The African Export-Import Bank (Afreximbank) has executed a project preparation facility financing head of terms with, UTM Offshore Ltd, under which the bank will part-finance activities designed to progress an Floating NLG, FLNG, project in Nigeria in to bankability.

According to Executive Vice-President of Afreximbank, Mr. Amr Kamel, the project is estimated to generate exports at a minimum of $11.4 billion from Nigeria to the rest of the world, in the process creating over 2,000 construction jobs and a minimum of 1,000 high-quality jobs.

This deal marks Afreximbank’s ongoing support in leading UTM’s fundraising efforts to secure the necessary investment required for the projects’ implementation. This project is the first FNLG project developed by an African-owned company on the continent.

UTM is undertaking the development, design and construction of an FLNG facility with an LNG nameplate production capacity of 1.2 million metric ton per annum and a storage capacity of 200,000 cu. m, as well as ancillary facilities to be located 60 km from the shore of Akwa Ibom State, Nigeria.

The bank said this project has economically transformative potential, establishing trade-enabling infrastructure that will allow Nigeria to pivot from a crude oil export-based economy to a gas-based processing industrial economy in turn unlocking significant development impacts.

Afreximbank will provide end-to-end solutions. During the pre-investment stage, the project preparation facility will be deployed to de-risk the project and rapidly progress it toward bankability. In addition, under the PPF, the bank will be appointed as mandated lead arranger and lead in syndicating the debt raise, with the ability to incorporate credit enhancements, if required.

UTM is undertaking the development, design, and construction of an FLNG facility with a Liquefied Natural Gas (LNG) nameplate production capacity of 1.2 million metric tons per annum and a storage capacity of 200,000 cubic meters, as well as ancillary facilities to be located 60km from the shore of Akwa Ibom State, Nigeria.

Representing a “first” in the African FLNG sector for UTM’s ownership, this intervention aligns with Afreximbank’s strategic aim of advancing activities, which boast of strong climate finance credentials and accelerate the development of energy transition solutions, in line with the reduction of carbon emissions prescribed at COP26.

The project has economically transformative potential – establishing trade-enabling infrastructure, which will allow Nigeria to ensure the monetisation of its natural resources and pivot from a crude oil export-based economy to a gas-based processing industrial economy.

Kamel said: “To support this project throughout its journey along the project finance value chain, Afreximbank is leveraging its diverse product suite to provide end-to-end solutions. During the pre-investment stage, the project preparation facility will be deployed towards de-risking the project and rapidly advancing it towards bankability.

“In addition, under the PPF, the Bank will be appointed as MLA and lead in syndicating the debt raise – with the ability to incorporate credit enhancements if required. Through its Financial Advisory Mandate, Afreximbank has been playing an active role in structuring the transaction to ensure optimal returns and debt sizing, as well as identifying equity investors to invest in the Project on favourable terms.”

The Managing Director and Chief Executive Officer of UTM Offshore Limited, Mr. Julius Rone, said the participation of the bank in the project’s preparation stage will play a significant role in de-risking this landmark activity being promoted by UTM Offshore, fast-tracking the fund-raising process and project implementation.

“The project is well-aligned with the strategy of the bank to support trade-enabling infrastructure that contributes to the monetisation of the natural resources of its member state whilst diversifying their dependence on crude oil export,” Rone said, adding, “This intervention also serves to demonstrate the bank’s commitment to promotingå climate finance and energy transition solutions that will lower Africa’s carbon footprint, in alignment with COP26 and the global de-carbonisation trend.”

African Export-Import Bank (Afreximbank) is a Pan-African multilateral financial institution mandated to finance and promote intra-and extra-African trade. It deploys innovative structures to deliver financing solutions that support the transformation of the structure of Africa’s trade, accelerating industrialisation and intra-regional trade, thereby boosting economic expansion in Africa.

The bank has a rich history of intervening in support of African countries in times of crisis. Through the Pandemic Trade Impact Mitigation Facility (PATIMFA) launched in April 2020, Afreximbank disbursed more than $6.5 billion in 2020 to help member countries manage the adverse impact of financial, economic, and health shocks caused by the COVID-19 pandemic.

Afreximbank has completed the development of a Pan-African Payment and Settlement System (PAPSS) that was adopted by the African Union (AU) as the payment and settlement platform to underpin the implementation of the African Continental Free Trade Agreement, AfCFTA.
Afreximbank is also working with the AU and the AfCFTA Secretariat to develop an Adjustment Facility to support countries in effectively participating in the AfCFTA. At the end of 2020, the bank’s total assets and guarantees stood at $21.5 billion, and its shareholder funds amounted to US$3.4 billion and has disbursed more than US$42 billion between 2016 and 2020.

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