Thursday, September 8, 2022

Poland signs with Nigeria to replace Russian gas

Poland’s President Andrzej Duda has become the first leader in the Eastern European country’s history to ever visit Nigeria since the two nations established diplomatic ties some 60 years ago. It was no mere courtesy visit.

In the aftermath of Russia’s invasion of Ukraine, and western sanctions that followed, the rouble went into a free fall. In a bid to save its currency, Russia, Europe’s largest gas supplier, insisted that all purchases must be made in rouble, a demand that Poland has rejected.

Poland eventually terminated its contract with Russia. With Europe now facing an energy crisis due to Moscow’s decision to slash oil and natural gas exports, energy prices have gone through the roof and sent the cost of living soaring across Europe.

Poland, consequently, has turned to Nigeria, already one of its gas suppliers, to increase its LNG shipments.

Speaking through an interpreter during a meeting with President Muhammadu Buhari in Abuja, President Duda noted that Nigeria, being rich in gas, will ensure a steady increase of LNG supply to Poland and to the EU.

“The Russian aggression against Ukraine, which is totally unjustified, has sparked off a very serious food crisis and a very serious energy crisis,” he says.

“Nigeria is indeed very wealthy. And I want to add that the first supplies of the LNG gas to our LNG gas terminal from Nigeria had already happened, just like the import of crude oil performed by our oil company Latos.

“Those shipments did happen in recent years. And that means well for the future, because we do want to further develop this cooperation. We want to increase the supplies from Nigeria to Poland. And in this way, we also want to contribute to the development of economic relations between both our countries,” he adds.

EU lobbies Nigeria

President Duda’s overtures were not a one-off. Back in May, the Deputy Director-General of the EU’s Energy Department, Matthew Baldwin, said the 27-country bloc needed additional gas supplies from Nigeria amid cuts from Russia, which before the war provided around 40% of Europe’s gas needs.

“The EU imports 14 percent of its total LNG supplies from Nigeria and there is potential to more than double this,” Baldwin told Reuters. “If we can get up to beyond 80 percent, at that point, there might be additional LNG that could be available for spot cargoes to come to Europe.”

Can Nigeria deliver?

It remains to be seen whether Nigeria, whose economy is badly battered, would be able to meet the demand with a violence-hit energy sector, plagued with unprecedented crude oil thefts by militants in the Niger Delta.

But Nigeria’s Oil Minister Timipre Sylva has high hopes that his country could turn into one of the major gas suppliers of Europe, urging the EU to increase investments in the Nigerian oil sector.

“We are positioning ourselves to be an alternative supplier to Europe,” he says. “We are already working with Algeria to build the Trans-Sahara Gas Pipeline that is going to take our gas all the way to Europe.

“We are also having a partnership with Morocco to extend the West Africa Gas Pipeline to Morocco and across the Mediterranean to Europe. We believe that Europe needs this gas and it is a win-win for all of us and it is in their interest to reduce these discriminatory investments that their banks are doing.”

Investment banker and economist Adetilewa Adebajo believes that Nigeria could indeed meet some of the vast European demand if there is the political will.

Speaking to The Africa Report, the managing director of the Lagos-based Corporate Finance Group highlights that Nigeria had recorded some successes in the oil and gas sector, particularly LNG which recorded an additional $8bn investment for the expansion of the seventh train.

“Investments of this nature could be replicated across the gas sector in Nigeria, in particular to drive power generation,” he says.

By Eniola Akinkuotu

The Africa Report

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