S&P: Niger Coup, Financing Woes Threatening Nigeria’s Gas Supply Plan to Europe

Emmanuel Addeh in Abuja

The Niger coup and funding challenges on a key domestic pipeline threaten to dash one of Nigeria’s most ambitious infrastructure projects and the West African country’s ticket to the European gas market, the Trans-Saharan gas pipeline.

The $13 billion, 4,128 km pipeline stretching from Warri in southern Nigeria through Niger to Algeria’s Hassi R’Mel gas hub, on the cards since 2002, would carry 30 Bcm of gas daily, according to a communique by the three countries last year.

Nigeria – Africa’s biggest oil producer but a marginal gas player – has declared the 2020s to be a “decade of gas”, a report by S&P Global Commodity Insights, stated.

“The Trans Saharan gas pipeline project presents an ambitious vision for energy infrastructure in Africa, however, its feasibility faces two critical challenges,” said Olufola Wusu, an energy expert and partner at Lagos-based Megathos Law Practice.

“First, the security situation in Niger and neighbouring regions poses a substantial risk to the project’s stability prior to construction and post construction. Second, its dependency on the delayed and self-funded AKK pipeline introduces complexity and uncertainty,” he stated.

Director of Strategic Stabilisation Advisors, a Washington DC-based consultancy and a former State Department official, Aneliese Bernard, said security experts were concerned an ECOWAS invasion could trigger an explosion of violence on the Nigeria-Niger border, where local leaders have kept a fragile peace, potentially bridging insecurity in both the Chad Basin and the wider Sahel complex.

Much of the Trans Saharan pipeline’s $13 billion capex will be spent in Niger, which currently produces just 20,000 bpd of oil and scant gas, but is due to bring the 110,000 b/d Chinese-built Niger-Benin oil pipeline online soon, the S&P report stated.

The Trans Saharan pipeline could enable Niger to monetise its own recoverable gas reserves, estimated at 34 Bcm according to Savannah Energy, the only Western oil company active in the country, and help tackle the region’s rampant illicit fuel trade.

Bernard said the Trans-Saharan pipeline could explain Algeria’s eagerness to mediate in the Niger crisis, after Mali and Burkina Faso – also led by military juntas – said they would assist Niger in the event of an ECOWAS invasion.

Uwadiae Osadiaye, an analyst at Lagos-based FBNQuest, told S&P that the continuation of the pipeline will depend on whether Niger’s junta decides to “play ball”. “If I am a member of the new government, I would consider it an opportunity for my country’s economy,” he said.

“The generals still want to do it,” NJ Ayuk, chairman of the African Energy Chamber, a lobbying group, told S&P Global.

The 614 km Ajaokuta-Kaduna-Kano gas pipeline, phase one of Nigeria’s section, has also seem state-run Nigerian National Petroleum Company Limited  shouldering the financial burden of the project, designed to transport gas from the southern Niger Delta to the north, feeding power stations and the Trans Saharan pipeline.

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