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Nigeria’s Newcross seeks partner for hydrogen energy projects

Nigerian oil and gas company Newcross is looking for an international partner for hydrogen project development, management executive Bolaji Ogundare tells The Africa Report.

The company is aiming to address the domestic market with “blue” hydrogen, produced by using fossil fuel energy, and export markets with “green hydrogen” made from renewable sources, Ogundare says. Almost all of the world’s hydrogen is currently produced using fossil fuels.

According to the International Energy Agency (IEA), global declines in the cost of hydrogen production mean Africa could deliver green hydrogen to northern Europe at competitive prices by 2030. In the future, says the IEA, Africa has the potential to produce 5,000 mega-tonnes of hydrogen per year at less than $2 per kilogramme, equivalent to today’s entire global energy supply.

Nigeria, despite its gas reserves, lags behind Egypt, which plans to release a $40b national hydrogen strategy. The Egyptian government has simplified procedures for establishing and managing hydrogen projects, which need only a single permit. Egypt has a pipeline for green hydrogen projects of 11.62 gigawatts, which would put it in the top three globally after Australia and level with Mauritania. The projects, according to Rystad Energy, are expected to come online before 2035.

Privately-held Newcross is majority owned by chairman Festus Fadeyi. The company is currently building its in-house hydrogen knowledge base. The Nigerian government is “definitely keen” on advancing hydrogen projects, Ogundare says. For the domestic market, the government sees blue hydrogen as a transition fuel, with green as “the last bus.”

  • Ogundare sees Germany, which in 2021 opened a hydrogen office in Abuja, as a realistic target market for exports.
  • While Nigeria has the potential to rival other African countries as a hydrogen producer, a great deal of regulatory and legislative work needs to be done, he says. “Anyone rushing to invest now without clarity will hit a roadblock.”
  • Options for transporting the hydrogen include ships and barges, liquefied natural gas (LNG), or pipelines, Ogundare says. The linings on pipelines designed for oil and gas present a risk of rust meaning that they may need to be repurposed, he adds.

Solar Investment

African debate over fossil fuels versus renewable energy is often polarised between partisans of the two camps. Ogundare argues that people on both sides need to better understand what is happening in other energy sectors. There needs to be a “symbiotic effort,” he says, pointing to the acquisition of Nigerian solar company Daystar Power by Royal Dutch Shell in September as an example of constructive cooperation.

Newcross’s NewX subsidiary is working to deploy solar energy solutions for the company’s operations and is looking for opportunities for non-fossil fuels provision in Nigeria. The goal is for 10% of the company’s portfolio to be non-fossil fuel within 10 years. “We have to have a footprint in the energy transition,” says group asset manager Bashiru Idowu.

  • The company, Ogundare says, wants to make investments in solar power in Nigeria and provide project expertise.
  • Newcross, which is open to opportunities outside Nigeria, is currently studying a potential solar investment in Lagos.

Bottom Line

Prospective investors will want to see regulatory clarity before backing Nigeria’s hydrogen development potential.

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