Steering Africa to prosperity through the Trans-Saharan gas pipeline

Globally, the transition to cleaner energy is on the front burner. Recent developments indicate that Nigeria, through the Trans-Saharan Gas Pipeline; Nigeria-Morocco Gas Pipeline, and Ajaokuta-Kaduna-Kano, may be launching a renewed double assault in the direction of the abundant gas reserves to drive the global energy transition. By extension of partnerships, other African countries are also to benefit, thereby becoming strong players in the global gas market, MUYIWA LUCAS writes.

“There is opportunity in adversity” as a maxim may be playing out for Nigeria and some African countries. This is so because, currently, the world’s attention has focused on the transition to renewable energy.

Amid the ongoing Russia/Ukraine conflict, Nigeria’s Minister of State on Petroleum Resources, Timipre Sylva seems to have seen the inherent opportunities.

Not ready to miss out on such openings, Sylva, in March, while receiving a delegation of the European Union (EU) Ambassadors led by Samuela Isopi, EU’s Ambassador to Nigeria and the Economic Community of West African States (ECOWAS) in his Abuja office, was quick to market the potential of the country and continent in the area of gas supply to Europe.

“Nigeria is ready to step in as an alternative gas supplier to Europe in the absence of supplies from Russia,” Sylva said. This much he said in the face of Russia’s continued threat of cutting gas supply to European countries.

His suggestion is not misplaced. After over four decades of abandonment of the Trans-Saharan Gas Pipeline Project (TSGP), life appears to have returned to the project which seeming was moribund as it received a fresh breath at a meeting of ECOWAS Mining and Petroleum Forum last February in Niamey, Niger Republic. It has also further rekindled hopes of better prospects for the continent.

The TSGP, a partnership among Nigeria, Niger and Algeria, will enable Europe to tap directly into the three countries’ significant natural gas reserves, helping it to diversify its supply sources while creating critical sources of revenue for African gas markets.

Reserve

Sylva may have aptly captured the capacity of Nigeria and African countries to feed Europe with gas, especially when it is considered that the country has one of the biggest gas reserves in the world with an estimated reserve of 206 trillion cubic feet (tcf), and a possibility of getting up to 600 tcf if fully exploited.

This size positions Nigeria to take a chunk of the gas market to Europe where Russia currently supplies about 30-40 per cent of the EU’s gas needs.


As of the end of last year, natural gas reserves in Africa totalled over 620 tcf, with Nigeria accounting for the largest reserves in the continent, while North Africa accounts for nearly half of the continent’s total gas reserves, with Algeria concentrating the highest amount, some 159 tcf.

A researcher at Statista, Lars Kamer, noted that natural gas reserves in Africa will last around another 55.7 years before being depleted if the present level of production is maintained.

He argued that in 2020, the African Continent generated 231 billion cubic meters of natural gas. This represented a growth of more than 70 per cent in the output level in comparison to that of 2000.

Currently, Algeria is the main natural gas producer in Africa, followed by Egypt and Nigeria.

Channelling to wealth

Checks revealed that as of 2020, Africa’s natural gas exports amounted to over 95 billion standard cubic meters, with Algeria, Egypt and Nigeria as major exporters.

Most of the African gas exports arrive in Europe, which absorbed 60 per cent of the gas exported from Africa in 2019, via pipelines or as Liquefied Natural Gas (LNG). Algeria’s gas exports, for instance, were destined almost entirely for Italy and Spain.

Kamar noted that the geographical proximity of Algeria to Europe makes the North African country a strategic supplier–although stagnating production levels and lack of infrastructure impose challenges for increasing the trade level.

Perhaps, aware of this infrastructural challenge, Nigeria, Niger and Algeria approved a roadmap to develop the 30 bcm/year Trans-Saharan Gas Pipeline (TSGP) between Warri in Nigeria and Hassi R’Mel in Algeria, passing through Niger.

The project, estimated to cost $13 billion aims to link Europe to the three countries’ natural gas reserves. The pipeline will be 4,128 km long, viz 1,037 km in Nigeria; 841 km in Niger and 2,310 km in Algeria. This project is regarded as an opportunity to diversify the European Union’s gas supplies.

The TSGP will also allow the supply of the regions of the Sahel countries. This project has been reactivated in a geopolitical context marked by strong international demand for gas and oil and a surge in prices after the war in Ukraine began eight months ago.

Algeria, whose proven natural gas reserves supplied around 11 per cent of the gas consumed in Europe before the war in Ukraine, compared with 47 per cent for Russia, is the first African exporter of natural gas and the seventh in the world.

Of the 257.5 bcm of gas extracted in Africa in 2021, Nigeria contributed 45.9 bcm translating to nearly 18 per cent. Additionally, out of 75.3 million tons per annum of Africa’s gas liquefaction capacity, Nigeria contributes 22.2 mtpa, as the country is home to a plant that makes up nearly 66 per cent of sub-Saharan Africa’s total LNG production capacity of 33.8 mtpa.

The Federal Government has said the project presents a huge opportunity for the country.

Sylva said: “This project is going to take the gas all the way from where it is produced, to the European market. And it cannot be a better time, because gas prices are quite firm at this point. I believe that it is a very good time for us to take advantage of very high gas prices globally.”

Development, plans, revival

On January 14, 2002, the then Nigerian National Petroleum Corporation (NNPC) and Algerian National Oil and Gas Company (Sonatrach), signed the Memorandum of Understanding (MoU) for preparations of the project and three years later, both parties signed a contract with Penspen Limited for a feasibility study of the project. The feasibility study was completed in September 2006, and it found the pipeline to be technically and economically feasible and reliable.

Still, in February 2009, NNPC and Sonatrach agreed to proceed with the draft MoU among three governments and the joint venture agreement. The inter-governmental agreement on the TSGP was signed by energy ministers of Nigeria, Niger and Algeria on July 3, 2009, in Abuja. Similarly, on July 28 2022, the Algerian, Nigerian and Nigerien ministers of energy signed an MoU for the implementation of the TSGP project, co-signed by Sylva, Algerian Minister of Energy and Mines, Mohamed Arkab, and Nigerien Minister of Energy and Renewable Energy, Mahamane Sani Mahamadou at the end of the work of the third tripartite ministerial meeting held in Algiers.

Route

The pipeline will start in the Warri region in Nigeria and run North through Niger to Hassi R’Mel in Algeria.

In Hassi R’Mel, the pipeline will connect to the existing Trans-Mediterranean, Maghreb–Europe, Medgaz and Galsi pipelines. These supply Europe from the gas transmission hubs at El Kala and Beni Saf on Algeria’s Mediterranean coast. The length of the pipeline would be 4,128 kilometres (2,565 miles): 1,037 kilometres (644 miles) in Nigeria, 841 kilometres (523 miles) in Niger, and 2,310 kilometres (1,440 miles) in Algeria.

Operator

The pipeline is to be built and operated by the partnership between the NNPC and Sonatrach. The company would include also the Republic of Niger. Initially, the NNPC and Sonatrach would hold a total of 90 per cent of shares, while Niger would hold 10 per cent.

Russian gas company Gazprom was said to have negotiated with Nigeria about its possible participation in the project. Also, Indian company GAIL, France’s Total S.A., Italy’s Eni SpA and Royal Dutch Shell have expressed interest in participation in the project.

A former Algerian Energy Minister, Chakib Khelil noted that “only partners that can bring something to the project, not just money, should be there.”

Energy ministers of Algeria and Nigeria have said that “if things go well, there will be no need to bring international oil companies into the project” and “if the need for partnership in the project arises, not every partner will be welcome on board on the project.”



Rival pipeline

With the takeoff of the TSGP foot-dragging, Nigeria, in May 2017, signed an agreement with Morocco to build the Nigeria-Morocco Gas Pipeline, which would carry natural gas from Nigeria through 13 West African countries, up to Morocco and Spain. This development was considered a major death knell on the TSGP.

The rival project, known as the Nigeria-Morocco Gas Pipeline Project (NMGP), launched last month, already has a signed MoU between the two countries and the Economic Community of West African States (ECOWAS), is seen as a significant step in fulfilling Nigeria’s drive toward harnessing the country’s abundant gas resources.

The NMGP pipeline is 5,600 kilometers (3,480-mile) in length and will run across 13 African countries and provide gas from Nigeria to West African countries through Morocco and subsequently to Europe. The pipeline will originate from Brass Island in Nigeria and terminate in the North of Morocco, where it will be connected to the existing Maghreb European Pipeline that originates from Algeria, via Morocco, to Spain.

Once completed, the project will supply about three billion standard cubic feet of gas per day (3bscfd) along the West African Coast from Nigeria, Benin, Togo, Ghana, Côte d’Ivoire, Liberia, Sierra Leone, Guinea, Guinea Bissau, Gambia, Senegal and Mauritania to Morocco.

The Managing Director of the Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari described the signing as a very important milestone. He expressed appreciation to Nigerian President Muhammadu Buhari and King Mohammed VI of Morocco who entrusted NNPC and the Moroccan National Office of Hydrocarbons and Mined (ONHYM) with the “strategic project.”

He said both countries stand to benefit from the project which extends beyond the supply of gas to energise countries along the route.


“Some of the benefits include the creation of wealth and improvement in the standard of living, integration of the economies within the region, mitigation against desertification and other benefits that will accrue as a result of the reduction in carbon emission,” he said.

The NMGP is aimed at monetising Nigeria’s abundant natural gas resources to generate additional revenue for the country, diversify its gas export routes and eliminate gas flaring.

AKK project

“We are already building gas infrastructure such as the Ajaokuta-Kaduna-Kano (AKK) pipeline project, expected to take gas to Algeria, and the West Africa Gas Pipeline project designed to take gas to Morroco,” Sylva said.

In July 2020, Nigeria officially launched the construction of the Ajaokuta-Kaduna-Kano (AKK) gas pipeline project, which links the Southwest of the country to the North. The AKK gas pipeline will deliver 3.5 bcf/d (99mcm/d or 36.1 bcm/year), of gas from several gas projects in the South of the country.

In the first phase, it will supply 2.5 bcf/d (57mcm/d or 20.7bcm/year), to domestic customers. Developed by the Nigerian National Petroleum Corporation (NNPC) using a build-and-transfer model, the pipeline is part of the TSGP project.

Commendation

While a critical issue for the TSGP is finance, for which Sylva has said funding the over $13 billion project will come from Europe, stakeholders across the continent have not ceased to praise the revival of the TSGP.

For instance, the African Energy Chamber, a group that promotes cross-border cooperation in the continent’s energy industry, praised the rebirth of the project.

The Executive Chairman of the African Energy Chamber, N.J Ayuk said the project would help Africa to contribute to the sustained and diversified supply that consuming countries are looking for, particularly the European Union, which is its market of proximity.

The Head of Gas and Power of Quest Energy, George Amara said the TSGP project will help to actualise the government’s National Gas Expansion Plan (NGEP) or the Gas Master Plan.

The African Energy Chamber maintained in its State of African Energy Q2 2022 Report that “gas will come from Algeria, Egypt and Nigeria, which will account fully for 80 per cent of African gas yields between 2022 and 2025. Algeria, Egypt and Nigeria will also account for about 60 per cent of the continent’s total LNG production capacity during the same period, even as construction moves ahead on new facilities.

A public analyst, Mayowa Sodipo said: “It actually shows that African countries are trying as much as possible to position themselves to possibly see how well they can help Europe cover the energy demand issues. Beyond this, this particular project will actually mean a lot for the three African countries involved, especially the benefits that will accrue to their local economies.”

For him, with the demand for natural gas rising, the TSGP project could transform Africa’s energy future if properly implemented.

The re-awakening

In March, EU delegates met with Nigerian officials in Abuja and held talks about diversifying Europe’s sources of energy.

At the meeting, Sylva urged the EU to encourage its oil and gas companies such as Shell, Eni, and Total Energies among others to scale up investments in the gas sector in Nigeria as it would help the EU meet its energy needs.

Sylva noted that the EU needed to have a rethink when the Russia/ Ukraine war is over, noting that “from what is happening with Russia, gas has been weaponised and unless you create an alternative, gas will continue to be weaponised.”

He assured the EU diplomats that “Nigeria will work with you and we are ready to be an alternative supplier of gas to the EU but you should tell your companies here in Nigeria to plan more investments here. If your companies invest more in Nigeria, it will also help us to increase our gas supplies to Europe.”

Ambassador Isopi urged Nigeria to take advantage of the opportunity offered by the present crisis in Europe to shore up gas supplies to Europe. She appealed to Nigeria to step into that gap supply chain as an alternative to Russia adding that the country must not allow the opportunity to pass it by.

Earlier in June, the government directed the then Nigerian National Petroleum Corporation (NNPC) to implement a deal on a gas pipeline to Europe through Morocco. Authorities are also planning to transport more gas from Southern to Northern Nigeria and build a major gas turbine in Abuja.

Renewed hopes

The TSGP, which had been regarded as a moribund for over four decades, received a fresh impetus at a meeting of the ECOWAS Mining and Petroleum Forum last February in Niamey, Niger Republic. It has also further rekindled hopes of better prospects for the continent and also further accentuated in an April meeting held in Abuja by the ministers of the partnering countries.

The TSGP will enable Europe to tap directly into the three country’s significant natural gas reserves, helping it diversify its supply sources while creating critical sources of revenue for African gas markets.

Much of the estimated $13 billion pipeline cost will be spent in Niger, acting as a much-needed boost for the already growing energy sector and the wider economy. It would also enable Niger to monetise its own gas reserves, estimated at 34 bcm, with recoverable reserves of 24 billion cubic meters.

“Restarting this project, sends a clear message to investors and important strategic partners in Europe and Africa, that things are changing in Africa,” Ayuk said.

The Nigerien Minister H.E. Mahamane Sani Mahamadou said: “This project will be transformational for all the countries involved and we in Niger are committed wholly to making it a success. It will bring jobs and much-needed revenue from gas monetisation.”

Niger already has experience in driving significant energy infrastructure projects, including the $2.2 billion Niger-Benin crude oil pipeline currently under construction from the Agadem Basin in Niger to the Cotonou Terminal offshore Benin.

Upon its expected completion in 2023, this 1,243-mile (2,000-km) pipeline will support production increases to more than 120,000 from a current 20,000 bpd.

Benefits

Sylva is convinced that the $13 billion TSGP project will present a huge opportunity for Nigeria, Niger and Algeria to tap into the European markets, saying it is an opportunity to diversify the European Union’s gas supplies.

Besides, he said that the project would bring the participating country’s gas resources closer to the European market, especially with the high cost of gas occasioned by the war between Russia and Ukraine.

Sylva said: “The project takes our gas to the European market directly. At present, a lot of gas in Nigeria is stranded or re-injected because there is no infrastructure to take the gas to the market. This project is going to take the gas all the way from where it is produced to the European market, and it cannot be a better time, because gas prices are quite firm at this point. I believe that it is a very good time for us to take advantage of very high gas prices globally.”

He added that it will serve as a huge boost to the economic growth of the African Continent.

He said it would, first, create a corridor for development across Africa. “Chad is also not far away from the corridor of this project. So, this project has a lot of potential for growing the economies of African countries, West African countries and North Africa,” Sylva said.

The Niger Republic Minister of Petroleum, Mahamadou Mahamane said the countries were ready to pull their resources to ensure that the project was achieved. He underscored the need to get the project going, saying it would promote regional cooperation as well as earn revenue for the countries.

The Algeria Minister of Energy and Mines, Mohamed Arkab said the reactivation of the project would boost the economic development of the countries and assist them to achieve carbon neutrality in line with the global energy transition.

“While being fully part of the project aimed at decarbonising the oil and gas industry in the short-term and at achieving carbon neutrality in the long-term, we remain convinced that a global and efficient energy transition cannot take place without the contribution of hydrocarbons,” he said.

“As such, natural gas presents itself as an energy of excellence to ensure this energy transition while ensuring the security of the supply of markets, whose demand is only increasing.

“I invite all the parties and teams to participate actively in the realisation of this important project, within the required deadlines.”

Fears

While stakeholders are convinced of the prospects of the TSGP, some are equally worried about the political will to see it through. Rightly so, given that, for over 40 years, the TSGP has been in the cooler and is just being revived now.

How far can this project which, if properly harnessed, can bring Africa out of its energy woes, come to life?