A Review of the Nigerian Energy Industry

Trans-Saharan gas project under review

gas-pipelineSam Iketuonye 16 August 2013, Sweetcrude, Lagos – Partner nations in the multi-billion dollar Trans-Saharan gas pipeline project, including Nigeria, are reviewing the prospects of the project, focusing especially on its commercial viability.

This is according to Dr David Ige, Executive Director, Gas and Power, at the Nigerian National Petroleum Corporation, NNPC, who said the need for the review arose out of consideration of changes in the international oil and gas market and the need to reposition the project.

“The Trans-Saharan stakeholders have come together to commission that study because in Europe, a lot has changed and it is so difficult to know whether the market is viable because there is growth and competition. Russia supplies gas and nobody knows what will happen with shale gas supply in Europe. Besides, the economic growth in Europe has flattened,” he said.

The Trans-Saharan Gas project was conceived over a decade ago by presidents of Nigeria, Niger and Algeria as an avenue to transport natural gas from Nigeria across the Sahara desert to North Africa and ultimately to markets in Europe..

At conception, the cost of the project was estimated at $12 billion, but industry sources said this must have escalated given the influence of market forces.

Ige, who hinted on this, was of the view that new developments in the oil and gas industry have called for re-evaluation of the project to ascertain its commercial viability.

In the last 10 years, according to him, gas consumption had grown substantially in Nigeria while the emergence of shale gas in many countries have affected market options, and these needed to be considered before the project could commence.

Nigeria, he said, is the principal shareholder in the project considering the fact that most of the gas supplies will come from the country, as he also announced that the NNPC would soon advertise for expression of interest, EoI, for the Calabar-Kano pipeline, from which the gas would be taken to the Nigerian border.

“Trans-Saharan gas project starts from Calabar to Kano and to Algeria and crossed to the Mediterranean.

“About 30 per cent of the entire segment of the project is in Nigeria, which is the Calabar to Kano. What we have done is to focus right now on that first leg, which is getting the Nigerian side right.

“Firstly, is that there is no Trans-Saharan without Trans-Nigeria. Secondly, for Trans- Saharan to be viable, we have to make sure we open access to different gas supply sources within Nigeria,” Ige added.

The NNPC executive director maintained that when the project was conceived, the level of domestic gas demand and usage in the Nigeria had not been anticipated, adding that a lot had changed since the domestic market is growing at an alarming rate.

According to him also, for the project to become reality, there was need for different sources of gas supply for transmission to Europe. “That is what the Ajaokuta-Calabar pipeline will do. At the moment, we are focused on that and we will deliver that. Soon, you will start to see expression of interest adverts for what we are trying to do in Calabar. The Eurobond Mr. President announced, part of it is dedicated to that project.

“At the meantime, we are re-evaluating the other end of the market in Europe to make sure that the market is as it was because a lot has changed in the market since 10 years ago. We have commissioned the studies and we are looking at the European gas market before we move to the next phase. What we have done is to position the Nigerian segment, which will serve Nigeria but it is tactically positioned to be ready to extend out of Nigeria,” he asserted.

Ige maintained that if the market survey turned out positive, the project could go on while it would be put on hold, if otherwise.

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