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Nigeria Nearing First-Ever Deal to Supply Gas to South Africa - BLOOMBERG
BY , Bloomberg News
Tanks onboard the Karmol LNGT Powership Asia floating storage and regasification unit (FSRU), operated by Karpowership, viewed from the ship's bridge whilst docked at Cape Town port in Cape Town, South Africa, on Tuesday, April 19, 2022. Karpowership, the world’s biggest supplier of floating gas-fired power plants, is expanding its generation capacity by 50% to tap global demand even as it struggles to get projects going in potentially its biggest market. Photographer: Dwayne Senior/Bloomberg , Bloomberg
(Bloomberg) -- Nigeria-based Riverside LNG said 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. Nigeria has Africa’s largest gas reserves.
“We’d probably very early in the year close out another segment of the market, an off-take for South Africa,” said Ige, a former executive at the state-owned Nigeria National Petroleum Corp. “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.”
Ige declined to provide further details on the talks with South African counterparts, citing confidentiality clauses. The company is also exploring opportunities in Liberia and Cameroon.
South Africa faces chronic power outages with the country’s old and poorly maintained power stations, run by debt-stricken state utility Eskom Holdings SOC Ltd., unable to keep up with demand. Plans to buy more electricity from private producers have been delayed by grid constraints and court action.
South Africa currently doesn’t have a facility to receive LNG. Deliveries from the project won’t start until 2027, so there’s “enough time for import terminal infrastructure,” Ige said.
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 gigawatt of its power needs by 2030.
A report produced by BloombergNEF and Bloomberg Philanthropies found that battery storage and flexible gas plants are the most cost-efficient solution to complement growth in solar and wind generation and guarantee power supply.
The 16-member Southern African Development Community has backed a $17 billion natural gas infrastructure plan to bolster energy supplies in the region, approving a blueprint to invest in infrastructure such as pipelines and terminals for local and imported supplies.
“A lot of those countries are looking to go gas,” he said. “We see a huge opportunity for Nigeria in being a trading hub.”
