Economics - France - Nigeria - Russia - Oil
West backs trans-Sahara pipeline to counter Russian monopoly
"Trans-Saharan starts after the Nigerian gas grid is completed”
Total, the French oil major, said on Wednesday that it was ready to participate in a planned Trans-Saharan gas pipeline, seen by European governments as a potential route to reducing their dependence on Russian energy.

By Matthew Green in Abuja

Gazprom, the Russian gas monopoly, has already 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.

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.

Guy Maurice, managing director of Total Exploration and Production in Nigeria, told an oil and gas conference in Abuja, the capital, that the pipeline would be a long-term strategic investment for Nigeria.

“Total is ready to be involved in this project,” Mr Maurice said.

Disruptions in Russian supplies to Europe have heightened anxiety in the EU, which depends on Russia for a quarter of its annual gas consumption of 300bn cubic metres. The planned Trans-Sahara pipeline could provide 20-30bn cubic metres.

Gazprom appeared to steal a march on rival energy companies interested in the project when it signed a memorandum of understanding with the Nigerian National Petroleum Corporation, the state oil company, in September last year to cooperate on gas exploration, production and transportation.

Gazprom has, however, 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.

“We’re continuing saying that though we are very interested in the Trans-Saharan pipeline, Trans-Saharan starts after the Nigerian gas grid is completed,” Vladimir Ilyanin, managing director of Gazprom’s subsidiary in Nigeria, told the conference.

Sonatrach, Algeria’s state oil company, is also interested in working on the pipeline, although a consortium to build the project has yet to emerge. Mr Ilyanin told reporters that Gazprom would be willing to consider working with other companies, perhaps including Total, to make the pipeline a reality.

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.

Nigeria has drafted plans for a new pricing system as part of a wider overhaul of the oil and gas industry, but energy companies say the government needs to guarantee them a higher price for gas to spur significant investment in harnessing it for local use. Nigeria boasts the world’s seventh largest reserves of gas.

Financial Times


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