As Europe continues to grapple with the shortage of natural gas, fueled by Western sanctions on Russia following its invasion of Ukraine, Germany is looking at Africa to diversify its gas supply.
German Chancellor Olaf Scholz paid a visit to Nigeria on Sunday, meeting with President Bola Tinubu to bolster bilateral relations and explore the possibility of gas supply from Nigeria. Germany is actively considering importing natural gas from Africa’s largest oil producer as part of its efforts to enhance energy security and diversify its energy supply.
During his visit to the Nigerian capital, Abuja, Chancellor Scholz emphasized the significance of securing natural gas from Nigeria, highlighting its potential impact not only on Germany but also on the global gas price. He noted that an increase in gas supply on the global market would likely result in decreased prices. Scholz stressed the importance of using available capacities around the world and diversifying gas production to ensure energy stability.
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The visit represents a crucial step in strengthening Nigeria-Germany relations and exploring opportunities for cooperation in the energy sector. Germany, which has been undergoing an energy transition, is seeking diverse sources of energy, particularly liquefied natural gas (LNG), to meet the demands of its power-intensive industries.
Chancellor Scholz’s visit to Nigeria also underscores Nigeria’s potential role as a strategic partner in addressing Germany’s energy needs and a contributor to global energy market dynamics. This exploration of gas supply from Nigeria aligns with both countries’ objectives to enhance energy security and promote economic cooperation.
Tinubu said that given Nigeria’s sizable resources, “we are ready to encourage investments in a gas pipeline.”
“Today marked a significant step forward in Nigeria-Germany relations with the visit of Chancellor Olaf Scholz of Germany reinforcing our shared commitment to mutual growth and prosperity,” he said.
“During our bilateral discussions, we exchanged views on pressing global issues, collaborative partnerships, expanding trade between both countries, democracy and human rights, and regional stability.”
Today marked a significant step forward in Nigeria-Germany relations with the visit of Chancellor Olaf Scholz of Germany @Bundeskanzler reinforcing our shared commitment to mutual growth and prosperity.
During our bilateral discussions, we exchanged views on pressing global… pic.twitter.com/HEAScYEyAw
— Bola Ahmed Tinubu (@officialABAT) October 29, 2023
Germany, which shut down its final nuclear power facilities this year and reduced its reliance on Russian pipeline gas during the previous year’s energy crisis, now requires significant quantities of liquefied natural gas (LNG) to sustain its energy-intensive industries. While Germany receives crude oil from Nigeria, it has not traditionally sourced natural gas from the country.
“Germany has a considerable demand for natural gas and, going forward, hydrogen to fuel its economy and energy transition. Concrete amounts should be agreed on in negotiations between Nigerian gas producers and German gas traders,” Scholz said.
Olaf Scholz highlighted the strong economic ties between Germany and Nigeria, noting that Nigeria is Germany’s second-largest trading partner in sub-Saharan Africa. Direct German investments in Nigeria reached €150 million ($158 million) in 2021, underscoring the importance of the economic relationship between the two nations.
Scholz’s visit to Nigeria follows his previous visit to Senegal, where he offered German assistance in developing gas fields off the country’s coast. Senegal is on track to deliver its initial quotas of natural gas in the second half of 2024, reflecting the progress in the cooperation between Germany and West African countries.
This visit to Nigeria marks his third trip to Africa since taking office two years ago, signaling Germany’s commitment to strengthening partnerships and enhancing energy security on the continent.
However, Nigeria has continued to face challenges in meeting its oil and gas production targets, which may affect its ability to ensure a reliable and stable gas supply to Germany.
Energy expert Kelvin Emmanuel emphasized the need for Nigeria to fully implement its Natural Gas Policy to meet the growing demand for gas supply from Germany. He also suggested the adoption of a Floating Liquefied Natural Gas (FLNG) model to boost gas production and reduce costs.
“One important hack the Nigerian Government can apply to increasing the output for LNG while both minimizing cost for liquefaction per metric tonne and avoiding the strenuous exercise of policing associated gas from flowstation to terminal is to have NNPC adopt the FLNG model,” he said.
He added that floating LNG vessels for offshore associated gas will reduce the turnaround time for delivering LNG projects, the risks of piping associated gas from the flow station to the terminal, and the cost of liquefaction per metric tonne.
Emmanuel explained that other benefits of floating NLG include increasing the amount of flared gas that currently stands at 700m standard cubic feet per day, delivering more revenues in dividends and taxes to the Nigerian Government in FX, and paying for existing amortization of gas forwards.
“The ministers of petroleum and gas resources should wake up and realize that there’s no time for games. The work is now!,” he said.