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Nigeria on Verge of Landmark Gas Supply Deal With South Africa

© AP Photo / Sunday AlambaGas flares belonging to the Agip Oil company are seen across farmland in Idu, Niger Delta area of Nigeria, Friday, Oct. 8, 2021.
Gas flares belonging to the Agip Oil company are seen across farmland in Idu, Niger Delta area of Nigeria, Friday, Oct. 8, 2021. - Sputnik Africa, 1920, 27.12.2023
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South Africa has struggled with persistent power shortages due to its aging and poorly maintained coal-fired power plants, operated by debt-ridden and state-owned utility Eskom, which has struggled to meet growing demand. Gas has been seen as one of the potential solutions to fuel the country's power generation plants.
Riverside LNG, a Nigeria-based company, has revealed that it is in talks to supply gas to South Africa, potentially marking the first such agreement between the two African nations.
Earlier this year, the Nigerian company signed a gas-export partnership agreement with Germany's Johannes Schuetze Energy Import AG, and is now actively seeking opportunities across the African continent, according to David Ige, a former executive at the state-owned Nigeria National Petroleum Corp.

"We’d probably very early in the year close out another segment of the market, an off-take for South Africa," Ige told Western media. "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 refrained from disclosing further specifics about the negotiations with South African counterparts, citing confidentiality clauses. Additionally, Riverside LNG is actively exploring opportunities in Liberia and Cameroon in West and Central Africa respectively, according to the former Nigerian executive.
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Currently, South Africa does not have a facility equipped to receive liquefied natural gas (LNG). With supplies from Nigeria not scheduled to begin until 2027, Ige emphasized that there is ample time to develop import terminal infrastructure.
South Africa, which has been grappling with persistent power shortages, currently relies on coal for approximately 80% of its power generation. However, with limited prospects for investment in this sector, South Africa is now turning its attention to renewable energy sources and aims to generate up to 60 gigawatts of its electricity needs from these sources by 2030.
Similarly, the Southern African Development Community, consisting of 16 member states, has backed a $17 billion natural gas infrastructure plan to bolster the region's energy supply. This initiative includes support for investment in infrastructure such as pipelines and terminals for both local and imported gas supplies.
"A lot of those countries are looking to go gas," Ige said. "We see a huge opportunity for Nigeria in being a trading hub."
According to the Organization of Petroleum Exporting Countries (OPEC), Nigeria has natural gas reserves of 5.85 trillion cubic meters, making it the country with the largest proven natural gas reserves on the African continent.
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