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Nigeria, Algeria to sign gas pipeline deal

By Omoh Gabriel, with agency report
An agreement to build a gas pipeline from Nigeria across the Sahara Desert to Algeria will be signed next week in Abuja, Algerian Energy and Mines Minister Chakib Khelil said on Monday.

Vanguard gathered that the European Union had said the Trans-Sahara project would help diversify its energy sources but the project has been stuck on the drawing board for years.

According to the report, the Khelil told reporters that, “I’m going to Abuja next week to sign the agreement. This is a final agreement for how we are going to proceed,” without giving further details.

“We are not going to have problems with financing, it’s not a technically difficult project. We hope, in a couple of years, (to start work),” he said, adding that the 4,128 km (2,580 mile) pipeline across West Africa could be completed by 2015.

Agency reports said  France’s Total and Anglo-Dutch energy giant Royal Dutch Shell are among the international firms that have expressed interest in the project aimed at diversifying Europe’s gas supplies away from Russia, which currently supplies a quarter of EU’s total demand.

But last week Russian gas monopoly Gazprom and Nigeria’s state-run oil company NNPC agreed to invest at least $2.5 billion to explore and develop Africa’s biggest oil and gas sector, including building the first part of the Trans-Sahara pipeline.

Some analysts see Russia’s keen interest in the West African country as an attempt to keep its grip on Europe’s natural gas supplies.

The whole Trans-Saharan project is estimated to cost around $10 billion for the pipeline and $3 billion for gathering centres, which industry observers said  could be off-putting for investors at a time of uncertain demand.

“In the medium-term, it is hard to see a project of that size and scale getting off the ground,” Ian Cronshaw, head of energy diversification at the International Energy Agency, told Reuters in Paris on Monday.

“In the current circumstances, with companies’ constrained balance sheets, difficult financing … Everywhere the big difficulty is getting large-scale pipelines off the ground.”
Demand is very uncertain… Beyond 2015 it could happen.” Nigeria has estimated natural gas reserves of 2.22 trillion cubic metres, the eighth largest in the world, but has had to rely on relatively expensive liquefied natural gas production and export by tanker.

It is the world’s fifth-biggest LNG player, with annual exports of 20.5 billion cubic metres in 2008, but the new pipeline could more than double the country’s export sales, sending up to 30 bcm a year to Europe. Despite Nigeria’s vast gas reserves it has been unable to develop its gas industry anywhere near full potential because of a lack of funds and regulation, while foreign investors in the country suffer attacks on their energy facilities.

Nigeria’s main militant group said it blew up a well-head in a Royal Dutch Shell oil field in Delta state last week and has already threatened to sabotage the Trans-Saharan gas pipeline if it ever gets built.


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