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No deal yet on firms for Sahara gas

By Omoh Gabriel, Business Editor
Three foreign companies, Russia’s Gazprom, France’s Total  and Italy’s Eni are among several others companies that have indicated interest in participating in the $10 billion Trans Sahara gas pipeline  project, Khelil   Algerian Energy and Mines Minister Chakib Khelil has disclosed in Daho.

Minister of State for Energy
Minister of State for Energy

But indication are that there may be delay in the execution of the Trans Sahara gas pipe line project has the promoters are yet to agree on which of these firms that will undertake the huge project.

According to Reuters, Nigeria, Niger and Algeria the countries to execute the project have yet to agree on which foreign companies will build the Trans_Sahara pipeline

However plans are underway for Nigeria’s NNPC, Algeria’s state oil company Sonatrach and Niger to sign a deal next week in Abuja to facilitate the pipeline project..

According to the Algeria Minister the European Union is looking forward to the project that will bring gas from Nigeria across the desert to Europe via Algeria as one that could help it diversify energy supplies.

He said “We haven’t accepted anybody yet,” Khelil told reporters after attending a gas meeting in Doha. “Only partners that can bring something to the project, not just money, should be there.” Russia’s Gazprom, France’s Total and Italy’s Eni were among many companies that had expressed interest in participating in the $10 billion project, Khelil disclosed.

Each country could sell stakes in its share of the pipeline, as long as the new partners were accepted by the other two countries, he added. Algeria could pump the Nigerian gas onto Europe through existing pipelines that it may expand, or it could build another line for the gas, he said. “Initially there will be space in the pipeline system,” he said. The pipeline would start operating in 2015_2016, he added.

Some of Algeria’s long_term supply contracts with Italy were due to expire in 2019_2020, so the Nigerian gas could replace Algerian gas in those contracts, he said. The partners would raise the money for the project against long_term sales deals.

The project had been stuck on the drawing board for years. Issues that took time to resolve were how to develop gas fields in Nigeria for both domestic and international supply and what would happen if the pipeline were cut off, he said. Algeria would supply gas if supplies from Nigeria halted for any reason, he added. Around a third of Nigeria’s oil output is out of action due to militant attacks on oil installations. Initially NNPC and Sonatrach would hold a total around 90 percent stakes in the project, while Niger would hold 10 per cent.

“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 the 4,128 km (2,580 mile) pipeline across West Africa could be completed by 2015. Agency reports say that 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 the EU’s total demand.

But last week Russian gas monopoly Gazprom and Nigeria’s 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 say 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, said in Paris on Monday.


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