Nigeria’s Riverside LNG in Talks to Supply Gas to South Africa
Nigeria-based Riverside LNG says it’s in talks to supply gas to South Africa, in what would be the first such deal between the two countries.
The company earlier this year, signed a gas-export partnership agreement with Johannes Schuetze Energy Import AG of Germany and is now looking for deals on the continent, Chief Executive Officer David Ige said in an interview in the capital, Abuja.
Germany is eyeing imports of natural gas from Nigeria in an effort to secure and diversify its energy supply, Chancellor Olaf Scholz had said during a visit to the country.
“This will also have an impact on the global gas price,” Scholz said in the Nigerian capital Abuja. “If more states offered gas on the global market, prices would decrease,” the German leader was reported to have said during her visit.
According to Riverside LNG’s CEO, David Ige, the company would “probably very early in the year close out another segment of the market, an off-take for South Africa,” he said.
“There’s a massively evolving gas market in the region, anything around 3,000 nautical miles of Nigeria. So that covers southern Africa, western Africa, all to northwest Europe and to the Caribbean and South America broadly.
“A lot of those countries are looking to go gas. We see a huge opportunity for Nigeria in being a trading hub,” Mr Ige added.
However, he refused to disclose additional details regarding the discussions with South African counterparts, citing confidentiality clauses.
Nigeria boasts the largest gas reserves in Africa with over 600 trillion standard cubic feet (SCF). The country is projected to dominate the African natural gas and liquefied natural gas (LNG) supply market from 2023 to 2027 as the use of fossil fuels becomes unpopular globally.
The company is also exploring opportunities in Liberia and Cameroon.
Electricity Crisis
According to South Africa’s state power firm Eskom, the country is facing electricity crisis in 2023, surpassing the levels of power cuts experienced last year following frequent breakdowns of Eskom’s ageing coal-fired plants and its substantial debt profile, which has impeded development in the sector.
Efforts to buy more electricity from private producers have faced setbacks due to grid constraints and legal challenges.
Although South Africa currently lacks the infrastructure to receive LNG, deliveries from the project are slated to commence in 2027, providing ample time for the development of import terminal infrastructure.
The country relies on coal for four-fifths of its power generation, but with investments unlikely in the sector, it is now looking at renewable sources to generate as much as 60 gigawatts of its power needs by 2030.
The World Bank is reportedly considering a $1 billion loan to support South Africa’s initiatives in revitalizing its energy sector.
Eskom also planned to allocate a portion of its $12.5 billion multilateral loans to deliver power to areas where grid congestion is hindering the transition to renewable sources.
Bloomberg/Hauwa Abu
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