Nigerian player UTM Offshore was granted its license to develop Nigeria’s first floating LNG (FLNG) plant, set to capture and process 2.8 million tons per annum of flared gas in the Niger Delta for local use and export in September this year. The project’s advancement reflects the growing role of FLNG in Africa, which offers flexible solutions for gas monetization and lower capital costs compared to traditional onshore LNG infrastructure. With Africa set to account for more than half of the world’s FLNG capacity brought online between 2023-2027, the Invest in African Energy (IAE) Forum in Paris next May will break down the costs and benefits of African FLNG as a viable commercialization option, with a view to maximizing investor returns and strengthening project bankability.
Balancing Cost Efficiency with Investor Returns
FLNG projects have a unique fiscal advantage as they minimize the need for extensive onshore infrastructure. The mobility of FLNG units allows operators to access gas fields in remote or offshore locations where building a full-scale onshore plant would be impractical or cost-prohibitive. This can reduce CAPEX significantly, while still allowing for substantial export revenues. Moreover, FLNG projects often have shorter construction times compared to onshore LNG plants, potentially enabling quicker revenue generation. Eni’s Coral Sul FLNG project, off the coast of Mozambique, utilized a fast-tracked schedule for engineering and procurement to come onstream within its initial budget and schedule, with a second FLNG facility – Coral Norte – now under development.
Conversely, large-scale projects – like the $20-billion Mozambique LNG project by TotalEnergies – require enormous initial investments. These projects can generate significant revenue for governments through royalties, taxes and exports, but require strong regulatory frameworks and stable political environments to attract and retain international investors. Mozambique’s government, for example, has introduced competitive tax regimes and production-sharing agreements to draw investors, resulting in long-term contracts with buyers in Asia and Europe. Investor returns are potentially much higher – as projects tap into vast gas reserves and benefit from economies of scale – yet are more exposed to global market fluctuations, making them sensitive to price volatility and political instability.
FLNG projects offer investors a balanced risk-reward profile. While FLNG typically has lower CAPEX compared to large onshore LNG projects, it still provides access to export markets. The Coral South FLNG project offers high returns by tapping into Mozambique’s prolific gas reserves, while avoiding the security risks associated with onshore facilities. Phase 1 of the Greater Tortue Ahmyim LNG project in Senegal and Mauritania – set to come online later this year – utilizes subsea pipelines and the Gimi FLNG vessel to produce gas from deepwater reservoirs, to then be exported to European markets. According to Wood Mackenzie, conversion design costs for the vessel are around $550 per ton, making FLNG cost-competitive to other field development options and paving the way for other fields in the region like Senegal’s Yakaar-Teranga and Mauritania’s BirAllah to be developed as FLNG as well.
Navigating Technical and Financial Requirements
That said, the novelty of FLNG technology introduces some operational, technical and financial risks. Operating in deep offshore environments like those in the Mauritania-Senegal GTA project requires sophisticated engineering solutions, complex subsea infrastructure and floating vessels. Although less capital-intensive than traditional onshore LNG plants, FLNG projects still require significant upfront investment and partnerships with international lenders to fund and de-risk projects, with UTM Offshore securing over $5 billion in commitments from the African Export-Import Bank to advance its project. The IAE 2025 Forum in Paris aims to bridge these barriers by connecting technology and service providers and global investors with the FLNG projects set to shape the future of Africa’s gas sector.
IAE 2025 is an exclusive forum designed to facilitate investment between African energy markets and global investors. Taking place May 13-14, 2025 in Paris, the event offers delegates two days of intensive engagement with industry experts, project developers, investors and policymakers. For more information, please visit www.invest-africa-energy.com. To sponsor or participate as a delegate, please contact [email protected].
