Nigeria: TotalEnergies Launches the Ubeta Gas Development to Supply Nigeria LNG Liquefaction Plant
TotalEnergies, holding a 40% interest in the OML 58 onshore license in Nigeria with NNPCL (60%), announced the Final Investment Decision for the Ubeta gas field. Located 80 km northwest of Port Harcourt, Ubeta will feature a 6-well cluster connected to existing facilities through an 11 km pipeline. Production is scheduled for 2027, aiming for 300 million cubic feet per day (70,000 barrels of oil equivalent per day). The gas will be supplied to the Nigeria LNG plant, where TotalEnergies holds a 15% stake. This low-emission, low-cost project will leverage existing facilities, integrate a 5 MW solar plant, and electrify the drilling rig. Over 90% of manhours will be worked locally, contributing to Nigeria's economy through increased NLNG exports.
- Final Investment Decision for Ubeta gas field development.
- Expected production start in 2027 with 300 million cubic feet per day.
- Low-emission and low-cost project leveraging existing facilities.
- Integration of a 5 MW solar plant and electrification of the drilling rig.
- 90% of manhours to be worked locally, enhancing local content.
- Contribution to the Nigerian economy through increased NLNG exports.
- None.
Insights
The Final Investment Decision (FID) for the Ubeta gas field development by TotalEnergies and the Nigerian National Petroleum Corporation Ltd is a significant event in the energy market. This project aligns with TotalEnergies' strategic focus on low-emission and low-cost developments, enhancing their portfolio's sustainability profile. The production start-up in 2027, aiming for a plateau of 300 million cubic feet per day, reflects a strong commitment to increasing natural gas output in Nigeria. This could positively impact Nigeria's LNG exports, especially with the ongoing capacity expansion of the NLNG plant on Bonny Island.
For investors, the integration of a 5 MW solar plant and the electrification of the drilling rig highlight the company's focus on reducing carbon intensity, which is increasingly becoming a critical metric for evaluating energy companies. The local content enhancement, with over 90% of manhours worked locally, can foster community goodwill and stability in operations. However, investors should also consider risks such as geopolitical instability and regulatory changes in Nigeria that might affect project timelines and costs.
From a financial perspective, the Ubeta gas development could be beneficial for TotalEnergies' bottom line, given its potential to increase the company's gas production capacity and revenue from LNG exports. The project's alignment with government incentives for non-associated gas developments further improves its financial attractiveness, potentially leading to favorable tax conditions and subsidies. The projected production start-up in 2027 suggests a medium-term revenue stream, providing a consistent growth opportunity over the next few years.
It's also important to note the collaboration with NNPCL, which holds a 60% interest. This partnership reduces the financial burden and risk on TotalEnergies, spreading it across both entities. However, investors should be aware of the capital expenditure required for this development and monitor how it aligns with the company’s overall financial health. The integration with OML58's existing infrastructure suggests optimized capital deployment, hinting at cost efficiency, but any delays or budget overruns could negatively impact financial performance.
The environmental aspects of the Ubeta gas field development are noteworthy. The project emphasizes low-emission and low-cost strategies, integrating renewable energy sources like the 5 MW solar plant and implementing electrification of the drilling rig. These initiatives not only reduce the carbon footprint but also align with global moves towards greener energy production, potentially enhancing TotalEnergies' ESG (Environmental, Social and Governance) ratings. This can attract environmentally conscious investors who prioritize sustainable development.
However, despite the positive steps towards reducing emissions, the extraction and processing of fossil fuels inherently carry environmental risks, including potential impacts on local ecosystems and communities. Continuous monitoring and stringent adherence to environmental regulations will be important in maintaining the project's sustainability claims. Investors should keep an eye on the actual environmental impact reports and any feedback from local environmental groups.
TotalEnergies (Paris:TTE) (LSE:TTE) (NYSE:TTE), operator of OML 58 onshore license in
Located about 80 km northwest of Port Harcourt in Rivers state, the OML 58 license contains two fields currently in production, the Obagi oil field and the Ibewa gas and condensate field. OML58 gas production is processed in the Obite treatment center and supplied to both the Nigerian domestic gas market and to Nigeria LNG (NLNG) plant.
Also located in OML58, the Ubeta gas condensate field will be developed with a new 6-well cluster connected to the existing Obite facilities through a 11 km buried pipeline. Production start-up is expected 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 located in Bonny Island with an on-going capacity expansion from 22 to 30 Mtpa, in which TotalEnergies holds a
Ubeta is a low-emission and low-cost development, leveraging on OML58 existing gas processing facilities. The carbon intensity of the project will be further reduced through a 5 MW solar plant currently under construction at the Obite site and the electrification of the drilling rig. TotalEnergies is working closely with NNPCL to enhance local content, with more than
“Ubeta is the latest in a series of projects developed by TotalEnergies in
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About TotalEnergies
TotalEnergies is a global integrated energy company that produces and markets energies: oil and biofuels, natural gas and green gases, renewables and electricity. Our more than 100,000 employees are committed to provide as many people as possible with energy that is more reliable, more affordable and more sustainable. Active in about 120 countries, TotalEnergies places sustainability at the heart of its strategy, its projects and its operations.
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Cautionary Note
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TotalEnergies Contacts
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Source: TotalEnergies SE
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