African Export-Import Bank (Afreximbank) has executed a project preparation facility financing head of terms with UTM Offshore Limited .

Under the deal signed at  its  29th Annual Meetings in Cairo, Egypt last week, the bank  will part-finance activities designed to progress the first Floating Liquefied Natural Gas (FLNG) project in Nigeria to bankability.

A statement by the bank  explained that the deal marks a continuation of the support of Afreximbank, which has been leading UTM’s fundraising efforts to secure the necessary investments required for the project’s implementation.

In line with Nigeria’s Petroleum Industry Act (PIA) and global energy transition efforts, UTM Offshore Limited is to carry out the FLNG project in partnership with the Nigerian National Petroleum Corporation (NNPC)  and its affiliate, LNG Investment Management Services.

According to the statement, Afreximbank considers the project   significant.

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 60-kilometre  from the shore of Akwa Ibom State.

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

Read Also; Afreximbank earmarks $40b to support intra-African trade

The statement added that 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.

“Specifically, the project will generate exports estimated 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,” Executive Vice-President of Afreximbank, Mr. Amr Kamel, said at a brief but colourful signing ceremony.

He added: “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.”

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 monetization of the natural resources of its member state whilst diversifying their dependence on crude oil export.”

“This intervention also serves to demonstrate the bank’s commitment to promoting å climate finance and energy transition solutions that will lower Africa’s carbon footprint, in alignment with COP26 and the global decarbonisation trend.”