Trans-Sahara gas pipeline

06 March 2009

Total, the French oil major, is ready to participate in a multi-billion dollar Trans-Saharan gas pipeline, to pipe Nigerian gas to Europe across the Sahara. The project will be completed by 2015.The pipeline will allow Europe to diversify its energy sources, rather than relying on Russia for 40% of its gas and a third of its oil. .

Trans-Sahara gas pipeline

The project, with capital costs estimated at $10 billion for the pipeline and $3 billion for gathering centres, would send up to 30 billion cubic metres a year of gas to Europe via a 4,128 km pipeline from Nigeria via Niger and Algeria

Total’s announcement suggests western energy companies are also starting to look seriously at the pipeline in spite of the huge technical and commercial challenges of pumping gas from Nigeria’s restive Niger Delta to export terminals on Algeria’s Mediterranean coast.

Gazprom, the Russian gas monopoly, has also expressed an interest in the €15bn scheme as part of a wider strategy of gaining access to Nigeria’s vast gas reserves, seen as crucial to future energy security in Europe and the US. However, many European industry experts believe that Gazprom’s keen interest in the scheme is an attempt to get a strangehold on Europe’s gas supplies. Gazprom’s involvement in the project could further strain relations with the European Union.

Gazprom said it would start work in Nigeria by investing at least $2.5bn to develop government plans to build a network of pipelines and processing plants to harness gas for local use. Development of Nigeria’s domestic gas industry is important, as it has been operating far below its full capacity due to lack of funds and regulation.

Gazprom’s offer to develop Nigeria’s domestic gas industry appeals directly to the ambitions of Umaru Yar’Adua, Nigeria’s president, who has made harnessing gas to fuel local power generation and industry a priority since he came to power in May, 2007.

Nigeria’s government has long complained that Western majors such as Total, Royal Dutch Shell, Chevron and ExxonMobil have been content to export the country’s oil and gas while doing little to ensure the energy spurs development in Nigeria.

Western companies counter that the government has failed to provide the kind of regulatory framework that would make investing in gas infrastructure to serve Nigerian markets a viable proposition.

Al-Quaida terrorists and Niger rebels pose an immense challenge to Gazprom and Total who want to press ahead with the pipeline. Nigeria's main militant group have already threatened to sabotage the pipeline.
The Movement for the Emancipation of the Niger Delta (MEND), which has shut down more than a fifth of Nigerian oil output since launching attacks on the industry in 2006, warned that the planned project would be a target. This warning undermines the notion that the pipeline could be a secure energy source for Europe.

Beyond the threat of militant attacks in Nigeria, it would also pass through northern Niger, parts of which are controlled by nomadic Tuareg rebels, and southern Algeria, where Islamic militant groups have long had a presence.