Infrastructure solutions provider Africa Finance Corporation (AFC) is arranging a project development facility to support Africa’s largest gas-to-methanol plant, in Akwa Ibom, Nigeria.

The project is targeting production of an initial 1.8-million tonnes a year of methanol and aims to considerably reduce CO₂ emissions by offsetting flaring of natural gas and turning it into a chemical for solvents, paints, plastics and car parts.

AFC has committed development-stage financing to derisk the project and enable it to reach financial close, along with providing financial advisory services to the sponsors to raise the required project financing and support successful delivery.

The venture is led by project development and investment firm Blackrose, and co-developed with the International Finance Corporation (IFC), the private sector arm of the World Bank Group, which is co-financing alongside AFC.

The project will be implemented in two phases, each with an installed capacity of 1.8-million tonnes a year.

Phase 1 will produce low-carbon methanol, an industrial chemical used in the manufacture of hundreds of everyday products, including solvents for the pharmaceutical industry, paints, plastics, automobile parts and construction materials.

This is also a lower-emissions alternative fuel used in hard-to-decarbonise sectors such as shipping and industrial boilers, with applications for cooking stoves and fuel cell solutions, AFC points out.

Phase 2 of the project will expand methanol production to include ammonia, highlighted as a critical feedstock for fertiliser production.

Most of Nigeria’s 200 cubic feet of natural gas reserves – the largest in Africa, accounting for a third of the continent’s total – remain unexploited, presenting a considerable opportunity to bolster the country’s natural resource beneficiation and enhance climate resilience, AFC avers.

It stresses that gas flaring has been a significant hazard for local people since the beginning of oil production, emitting chemicals linked to respiratory and other health issues.

Methanol is produced using synthetic gas predominantly from coal and natural gas. By using best-in-class energy efficient production methods, the plant will achieve a much lower net carbon intensity compared to traditional methanol synthesis techniques, while also reducing CO₂ emissions by converting gas that would otherwise have been flared, AFC avers.  

Also, the project incorporates plans for carbon capture and offset strategies as well as the use of external hydrogen to bring targets even closer to carbon neutrality, it adds.

Once operational, the gas-to-methanol plant is expected to generate more than 2 500 local jobs during the construction phase and a further 16 000 jobs indirectly by catalysing manufacturing activity and economic diversification.

“This innovative project is transforming an immense negative for Nigerians into a very significant positive by harnessing this country’s abundant gas reserves as a unique opportunity to become a global leader in low-carbon manufacturing and energy systems.

“This strategic collaboration with Blackrose and IFC underscores our dedication to supporting Africa’s pragmatic transition to net zero, emphasising rapid industrialisation, local job creation, and socioeconomic advancement through the production of methanol, a versatile and low-carbon industrial feedstock,” says AFC president and CEO Samaila Zubairu.