Favorite Sahara gas pipeline threatened by Niger coup
A 5,600 km Nigeria-Morocco pipeline will cross 13 countries
Nigeria holds 203 Tcf of gas, but production and exports still lag behind
Gas-rich Nigeria is seeking to accelerate the construction of a 5,600 km gas pipeline to Morocco, capable of supplying Europe after a total breakdown in diplomatic relations with Niger compromised the trans-Saharan pipeline to Algeria, S&P Global reported.
Nigeria, Africa’s largest oil producer but a marginal player in the gas sector, has declared the 2020s a “gas decade”. The country, which holds around 203 Tcf of proven natural gas reserves, hopes to become a major supplier to Europe as the continent shifts away from Russian gas. However, LNG exports to Europe fell 22.7% in 2023, according to data from S&P Global Commodity Insights, due in part to a lack of deepwater gas projects and export infrastructure.
Until recently, officials expected the $13 billion trans-Saharan gas pipeline to be the solution. Stretching 4,128 km from Warri in southern Nigeria through Niger to the Hassi R’Mel gas center in Algeria, first proposed in 2002, the conduit would transport 30 billion cubic meters of gas per day, according to the three countries.
However, relations between Nigeria and Niger have been frozen since the July 2023 coup, when Nigerien President Mohammed Bazoum was overthrown, leading to punitive economic sanctions from the Economic Community of African States of the West (ECOWAS), of which Nigeria is the de facto leader.
The sanctions have frozen state assets and halted commercial activities in the longtime Western ally, which holds significant uranium and oil reserves. In late January, Niger, Burkina Faso and Mali, all led by military juntas, announced they would leave ECOWAS, threatening $150 billion in regional trade a year.
Analysts told S&P Global that the breakdown in relations and Niger’s potential departure from ECOWAS would all but kill the trans-Saharan pipeline, much of whose capital expenditure was planned for Niger. “Diplomatic relations between Niger and the Nigerian government are zero,” said Uwadiae Osadiaye, an analyst at Lagos-based FBNQuest.
Instead, Osadiaye said Abuja now favors another route for its gas: the 3 Bcf/d Nigeria-Morocco pipeline crossing 13 West African countries.
On January 24, the Nigerian Minister of State for Gas, Ekperikpe Ekpo, visited Rabat “to accelerate the final decision-making process on the Nigeria-Morocco gas pipeline”, according to a press release from the Nigeria National Petroleum Corp. Ekpo held discussions with the Moroccan Minister of Energy Transition and Sustainable Development, Leila Bengali.
“Both parties underlined the strategic importance of the project for the two countries and the entire African continent, as well as the need to complete it quickly in line to combat energy poverty on the African continent”, said the NNPC. “The project, among other things, will contribute to the monetization of Nigeria’s gas resources…and promote economic and regional cooperation among African countries. »
These discussions follow a bilateral cooperation agreement in 2017 and an ambitious memorandum of understanding in 2022 on the project, which would cross Benin, Togo, Ghana, Ivory Coast, Liberia, Sierra Leone, Guinea, Guinea-Bissau, Gambia, Senegal, and Mauritania, ending in Morocco with a diversion to Cadiz in Spain.
It would tie into the 100 million cubic feet per day West African gas pipeline linking Nigeria, Benin, Togo, and Ghana. All participating African countries have expressed interest in the project, and several have signed their memorandums of understanding.
However, analysts said that the realization of such a project is still far away, even uncertain.
“The Nigerian government has issued several statements in recent months regarding investments in the oil and gas sector, likely seeking to boost President Bola Tinubu’s image as a businessman, in line with recent statements that Nigeria is ‘ready for business,’” said Ida Hockerfelt, senior research analyst at S&P Global. “This recent announcement to expedite the final investment decision for the pipeline is likely a similar attempt to highlight the government’s efforts, particularly about gas. However, there are still several issues to be resolved, particularly regarding financing. »
Early estimates put the cost of the pipeline at $25 billion.
With limited gas projects and export infrastructure, Nigeria finds itself unable to meet the growing gas demand of the European continent, which is turning away from Russian gas. At the same time, Nigerian oil production has declined due to underinvestment, technical problems, and oil theft.
In 2023, Nigeria exported just 7 million tonnes of LNG to Europe, according to S&P Global data, compared to 9.06 million tonnes in 2022.
Meanwhile, North African countries, including Algeria and Libya have become major gas suppliers to Europe. Algeria, which also supplies gas by pipeline to Italy, saw its LNG exports to Europe increase by 23% in 2023.
