The 4,500 kilometre oil pipeline from Nigeria to Europe, the Nigal (Nigeria-Algeria) project, threatens to lose its way in the desert.
The pipeline, which is expected to deliver Nigerian oil to Europe through Niger and Algeria, took shape in 2002 after a memorandum of understanding between Algeria’s Hydrocarbons National Enterprise (Sonatrach) and Nigeria’s National Petroleum Corporation (NNPC).
Subsequently, Algeria and Nigeria, as the main contributors, agreed to do a feasibility study, then set up a joint company to oversee the project.
By 2007, everything seemed on course. Both countries did a media campaign in Europe to promote the project.
In 2009, Niger joined the pipeline bandwagon. The momentum was on. Several international oil and gas firms— Total, Shell, ENI Agip, and Russia’s Gazprom — expressed interest.
Guy Maurice, Total manager in Nigeria, said the project, “is a strategic diversification for Nigeria for the long term.” Russian President Vladimir Medvedev, on his recent visit to Nigeria, announced his country’s desire for a piece of the action.
Following Medvedev’s comments, Gazprom and NNPC met to talk about investing at least $2.5 billion to construct the first segment of the pipeline.
When built, the pipeline will be very impressive. Running 4,500km, it starts from the Niger Delta region in Nigeria (which has estimated reserves of 180,000 billion barrels), snakes across the country for 1,300km, then runs 750km through Niger, and finally crosses 2,500km of Algeria to end up in Algiers.
Once commissioned, it will pour 20 to 30 billion cubic metres of oil into Europe every year.
But while the oil was supposed to be flowing through the Nigal by 2012, completion is now likely to be delayed further — with the earliest date of commissioning now pushed back to 2015.
Some experts see an even later date. Hafidh Souaili, expert and writer on energy affairs in Algiers, says: “2017 is more or less the earliest we shall see light at the end of the tunnel.”
Many difficulties have arisen, key among them being funding,” says Souaili. In spite of Algeria and Nigeria’s commitment to partially support the $13 billion pipeline, they have yet to put serious money on the table.
The Nigal, therefore, still relies on foreign financial contributions.
The European Union has said it considers the pipeline a strategic project, and has supported the research and development segments.
“But Brussels,” observes Souaili, “is still plagued by doubt.” Moreover, he thinks the global financial crisis is not enough to explain Europe’s sudden reluctance.
He believes other European producers are prevailing on the EU to drag its feet. “Norway and Russia are major oil suppliers to Europe,” he says, “and are not keen to lose their market or to share it.”
Mustapha Benkhemou, former energy strategist in the Algerian Ministry of Energy, says: “For Russia, oil is the trump card in its relations with EU countries.
He believes other European producers are prevailing on the EU to drag its feet. “Norway and Russia are major oil suppliers to Europe,” he says, “and are not keen to lose their market or to share it.”
Mustapha Benkhemou, former energy strategist in the Algerian Ministry of Energy, says: “For Russia, oil is the trump card in its relations with EU countries.
Currently, the European Union gets 40 per cent of its gas and 30 per cent of its oil from Russia. Algeria contributes 15 per cent.
“In the long run, the European Union will not want to continue its dependence on Russia,” says Souaili, “especially after recent clashes over oil prices between Moscow and Kiev, and the effect on oil delivery to Europe.
“Nigerian oil is, for Europe, an opportunity for substitution and diversification,” he says. “Nigerian oil reserves,” says Souaili, “represent 10 years of European Union consumption.”
Other oil producers such as Norway, Qatar and Libya, he argues, are not able — for environmental, technical and economic reasons — to meet all European Union oil needs.
However, finances are not the only problem, according to Algerian academic Mohamed Hachemaoui.
“Insecurity and violence in the Niger Delta are the other difficulties that plague the project.”
The Movement for the Emancipation of the Niger Delta (Mend), an armed opposition group that proclaims sovereignty over the region, often attacks and kidnaps foreign workers, forcing federal authorities in the capital Abuja to meet its demands.
“However,” wrote economist Yacine Merabet, “the creation of a joint police and army force has now ensured protection of oil and gas installations and prevented armed groups from committing violent acts on existing and future oil pipelines.”
Algeria, which has so far contributed more money to the Nigal project than Nigeria, has two pipelines to supply Europe.
In 2009, it erected the Medgaz line, with an annual capacity of 8 to 10 billion cubic metres, linking the country to Spain through Morocco and Gibraltar.
Galsi, built in 1996, links the Algerian coast to Italy through Sardinia, and has a capacity of 8 billion cubic metres.
Algeria’s former energy minister Chekib Khallil was a champion of the Nigal project.
But the corruption and mismanagement scandals that rocked the first National Hydrocarbons Enterprise (before it became Sonatrach) brought him down in last May’s government reshuffle.
Sonatrach has a new boss, and also a new Minister of Energy, Youcef Yousfi, who was former director general of Sonatrach and minister of petrol and mines. So far, neither Yousfi nor Sonatrach’s new boss will say anything about Nigal.
“We have to wait until November or December,” says Hafidh Souaili, before Sonatrach and NNPC meet and take a new set of decisions. That is a couple of months added to the delay.
No comments:
Post a Comment