Nigeria’s Riverside LNG in Talks to Fuel South Africa’s Energy Future

In a pivotal move set to reshape the energy industry across continents, Nigeria-based Riverside LNG is on the brink of sealing a landmark gas supply deal with South Africa. Bloomberg’s report on Wednesday unveiled the groundbreaking negotiations between the two countries, marking a potential first-time agreement in gas trade.

David Ige, the Chief Executive Officer of Riverside LNG and a distinguished figure recognized for spearheading Nigeria’s Gas Master Plan disclosed the imminent deal during an exclusive interview held in Abuja. The company, in alliance with Johannes Schuetze Energy Import AG from Germany, previously inked a gas-export partnership, sparking ambitions to explore diverse markets, particularly in Africa.

“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.

“We’d probably very early in the year close out another segment of the market, an off-take for South Africa,” he added, emphasizing the burgeoning gas market’s evolution within a radius of 3,000 nautical miles from Nigeria, spanning Southern and Western Africa to Northwest Europe, the Caribbean, and South America.

While withholding specifics due to confidentiality constraints, Ige hinted at parallel negotiations in Liberia and Cameroon, showcasing Riverside LNG’s overarching strategy to expand its gas footprint across the continent.

South Africa’s pressing energy challenges, marked by chronic power outages due to aging infrastructure and operational setbacks at Eskom Holdings SOC Ltd., have underscored the urgency for alternative energy sources. Riverside LNG’s proposed gas deliveries, slated to commence in 2027, coincide with South Africa’s quest to diversify its energy mix, eyeing renewable sources to meet 60 gigawatts of power needs by 2030.

A collaborative report by BloombergNEF and Bloomberg Philanthropies endorsed the integration of battery storage and flexible gas plants to bolster the nation’s power supply, aligning with the 16-member Southern African Development Community’s (SADC) $17 billion natural gas infrastructure plan. This blueprint aims to fortify energy resources through substantial investments in pipelines and terminals, garnering support for gas adoption among member nations.

“We see a huge opportunity for Nigeria in being a trading hub,” asserted Ige, highlighting Nigeria’s ambition to position itself as a pivotal player in the regional gas trade. Despite Nigeria’s status as a global gas reserves powerhouse, inadequate investments in infrastructure have curtailed its ability to harness the full potential of its gas reserves, creating a deficit in transportation infrastructure.

With Nigeria’s proclamation of “the decade of gas,” aiming to elevate gas prominence in its energy mix and exports by 2030, the country’s vast reserves totaling 209.5 trillion cubic feet position it as Africa’s foremost gas repository. However, challenges persist, including theft on pipelines—a critical issue causing disruptions and environmental hazards, as highlighted by Nnamdi Anowi, Nigeria LNG’s general manager.

Riverside LNG’s recent ventures, including a $500 million gas export deal with Johannes Scheutze Energy Import AG and collaborative agreements involving NNPC Limited, UTM Offshore, Delta State, and Wison Heavy Industry, reflect Nigeria’s concerted efforts to optimize its gas potential.

Challenges and Drawbacks: A Closer Look

While Riverside LNG’s potential gas supply deal with South Africa heralds a new era in transcontinental energy partnerships, Nigeria grapples with multifaceted hurdles hindering the full exploitation of its abundant gas reserves.

Infrastructure Deficiency and Pipeline Theft: Despite Nigeria’s distinction as a global gas reserves powerhouse, insufficient investments in infrastructure have stymied efforts to harness its full potential. The deficit in transportation infrastructure, coupled with pipeline theft, emerges as a critical bottleneck. Nnamdi Anowi’s revelation of pipeline theft causing disruptions and environmental hazards underscores the persistent challenges faced by industry players.

Flared Gas: Revenue Loss and Environmental Impact: The practice of gas flaring in Nigeria poses a significant conundrum. The magnitude of flared gas has contributed to substantial revenue losses, environmental degradation, and health risks in host communities. Over the past decade, Nigeria has witnessed an alarming 80 billion standard cubic meters of gas flaring, equivalent to a staggering N9 trillion in lost revenues. This has not only compromised revenue potential but also perpetuated health and environmental hazards in localities adjacent to gas-producing facilities.

Regulatory and Operational Issues: Moreover, regulatory and operational constraints have impeded optimal gas production. Riverside LNG’s trains operating at half capacity, attributed to limited gas supply from upstream companies, exemplify the systemic challenges plaguing the industry. The delays and setbacks in full-scale operations hinder the realization of Nigeria’s aspirations to emerge as a top-tier gas-producing nation.

Environmental and Community Concerns: The ramifications of gas production transcend economic aspects, with concerns revolving around the volume and impact of flared gas on host communities. Environmental hazards and health risks faced by these communities due to gas flaring highlight the urgency for effective measures to mitigate the fallout.