Europe is still looking for reliable alternative sources of energy especially gas, as its energy relations has fallen nosedive with Russia. It has been exploring energy sources from Asian region down to Africa. But while African energy sources exist, it largely lacks infrastructure to transport it up to Europe. And transporting gas would have to go across borders which requires some kind of regulations and clearance agreements between the African countries.
The Trans-Saharan gas pipeline (also known as NIGAL pipeline and Trans-African gas pipeline) was first proposed back in the 1970s. The inter-governmental agreement on the pipeline was signed by Energy Ministers of Nigeria, Niger and Algeria on 3 July 2009 in Abuja. It has not been materialized, among many factors, due to lack of finance and multiple complicated government bureaucracy. But Europe’s demand is pushing for fixing some solutions and resolving obstacles to realize this project.
Nigerian authorities said that Russia’s Gazprom has negotiated with Nigeria about its possible participation in the project. Experts described this interest as a business strategic step to gatekeep and control the flow of gas from Africa into Europe. Russia would be interested tactically by delaying the project. Its aim is to be the leading supplier, and any other competitors must be placed under tight-monitoring and control.
Charles Robertson, Global Chief Economist at Renaissance Capital, questioned in an email discussion with this author how Russia can heavily invest in Africa’s energy sector especially in the exploration and production of oil and gas to be exported to markets in Europe. For natural gas, Russia accounts for about 40% of the European Union (EU) natural gas imports and it ultimately aims at controlling the leading position to Europe.
“It is evident that Russia or Kazakh oil competes with Libyan, Angolan or Nigerian oil. Russia or Kazakh gas competes with Algerian or Egyptian gas. From geopolitical and economic perspectives, Russia can supply food – but that’s mainly needed by north Africa,” he wrote, and concluded: “By forging strong cooperation, the European Union (EU) has more of the industrial machinery that Africa might need to industrialize, although Chinese machinery may be more appropriate for the technical level of industry in Africa.”
Russian companies have exited mega-projects in Zimbabwe, and also went out from Botswana, Cameroon and Sierra Leone. Russians were not chosen after the project bidding process in Mozambique. There are, therefore, other reliable potential foreign corporate investors such as Indian company GAIL, France’s Total S.A., Italy’s Eni SpA and Royal Dutch Shell have expressed interest in participating in the project.
Differences exist though. According to the Algerian Energy Minister Chakib Khelil – “only partners that can bring something to the project, not just money, should be there. On the other side, 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.”
Mahamane Sani Mahamadou, Minister of Petroleum for the Republic of Niger; Mohamed Arkab, Minister of Energy and Mines, Algeria, and Chief Timipre Sylva, Minister of State for Petroleum Resources of Nigeria as well as the Director Generals of National Oil Companies (NOCs) of the three African countries held thorough discussions on the implementation of the the multi-billion Trans-Saharan Gas Pipeline (TSGP) in June 2022, in Abuja, capital of the Federal Republic of Nigeria.
According to reports, a Steering Committee made up of the three Ministers and Director Generals of the NOCs, established during the two-day meeting, will be responsible for updating the feasibility study for TSGP and will meet at the end of July 2022 in Algiers to discuss how to progress with the TSGP project.
The Ministry of Petroleum of Niger commends all parties for this significant step, viewing both the establishment of the taskforce and roadmap as key drivers towards making the TSGP as reality.
With energy poverty increasing across the African continent due to limited investments in energy projects, delays in exploration, production and infrastructure rollout, the Covid-19 pandemic and global energy transition-related policies, the TSGP project will bring in a new era of energy reliability for Africa.
With the 4,128 km pipeline running from Warri in Nigeria to Hassi R’Mel in Algeria via Niger, the pipeline will not only create a direct connection between Nigeria and Algeria’s gas fields to European markets but will bring significant benefits for Niger.
With over 34 billion cubic meters of gas, Niger, in its own rights, also has the potential to become a gas exporter, and with Europe expanding energy ties with Africa, the TSGP project will mark a new era of improved regional cooperation in Africa, enhancing gas monetization and exports while scaling up Niger-exports to Europe via Algeria.
Meanwhile, with the pipeline making headway, opportunities for the country to increase domestic gas utilization on the back of new reserves from Niger and Nigeria have arisen. With Niger seeking to improve electricity access and ensure energy affordability through increased exploitation of gas, the TSGP initiative will be a game changer.
The pipeline will enable up to 30 billion cubic meters of natural gas to be traded yearly enhancing regional and international energy trade, enabling Niger to expand the role of natural gas in its energy mix and address energy poverty.
The efforts of Afreximbank for the creation of an African Energy Bank is a huge testimony of how Africa can enhance cooperation and leverage domestic solutions to optimize its oil and gas market, notes Sebastian Wagner, Executive Chair of the Germany Africa Business Forum. “What we want to see is African financiers rallying towards supporting the rollout of TSGP. Increased oil and gas exploration, production and assets development is what will bring Africa out of energy poverty by 2030,” Wagner acknowledged in comments.
With gas emerging as the energy of the future, the US$13 billion TSGP project could lead to socioeconomic growth by unlocking massive investments across the energy sector. It will simultaneously help create jobs in various industries including energy, petrochemicals and manufacturing whilst optimizing energy production and positioning Africa as a global energy hub.
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 mi): 1,037 kilometres (644 miles) in Nigeria, 841 kilometres (523 miles) in Niger, and 2,310 kilometres (1,440 miles) in Algeria.
Reports say the pipeline to be built and operated in partnership between the NNPC and Sonatrach. The company would include the Republic of Niger. Initially NNPC and Sonatrach would hold a total 90% of shares, while Niger would hold 10%.
The annual capacity of the pipeline, previously estimated at US$10 billion, would be up to 30 billion cubic meters of natural gas. The pipeline was originally expected to be operational by 2015. In the year 2019, the project is still in the prospecting phase. Now, it is unknown what next as there are also safety concerns about the project itself and the future practical operations.
In spite of these, concerns as to Africa being stopgap solution for natural gas subsists mainly because of the huge infrastructure deficit. Lack of investment in infrastructure has significantly hampered the energy industry, particularly in sub-Saharan Africa. Significant investments are largely required to construct trans-regional and intercontinental pipelines to open access to Europe.
Considering many factors including political and security, Nigeria is currently not a top destination for investment in oil and gas industry. The main handicap is that Nigeria, Niger and Algeria are among the least secured areas in the region because of various active terrorist movements that destabilize the all technical processes and construction of gas pipelines across Africa. That, however, the Trans-Saharan gas pipeline is still seen, despite the challenges and the unpredictable risks, as an opportunity to diversify the gas supplies to the European Union.
