State-run Nigerian National Petroleum Corp (NNPC) has signed a project development agreement (PDA) with Tor Olav Troim-led Golar LNG for the deployment of one floating LNG production unit to be sited off Nigeria.

Under the PDA the partners will look at how to monetise the proven gas reserves in shallow waters in the Niger Delta region.

The agreement outlines a plan to use an FLNG unit with capacity to handle about 400m to 500m cubic feet per day of gas and produce LNG, LPG and condensate.

The two companies plan to take a final investment decision on the project before the end of the fourth quarter of 2024 with the aim of producing the first gas in 2027.

NNPC said the agreement was “another major milestone” in ensuring the commercialisation of Nigeria’s gas reserves.

Golar LNG chief executive Karl Fredrik Staubo attended the signing ceremony for the PDA along with NNPC officials including chief financial officer Umar Ajiya, executive vice president of gas power and new energy Olalekan Ogunleye and upstream executive vice president Oritsemeyiwa Eyesan.

The PDA follows the signing of a memorandum of understanding between the two companies in April 2023.

Golar has identified two options for its next-up deal on the supply of an FLNG unit.

The company is considering redeploying its existing unit, the FLNG Hilli, which is currently stationed off Cameroon. The floater’s existing charter is due to end in July 2026.

Announcing its first-quarter results in May, Golar said it had progressed a framework agreement with a potential charterer of the FLNG Hilli to detailed contract negotiations for a 20-year deal.

In reply to questions, Staubo said the talks could involve multiple FLNG units and discussions continue with the potential charterer about whether a first one would be the FLNG Hilli or Golar Mark II conversion.

During a results call, Staubo also said the company is sitting on a yard slot which offers a second half of 2027 delivery for its planned Mark II LNG carrier-to-FLNG unit conversion. But he said the company would need to take an final investment decision on a project this year to hang on to this berth.