Algiers and Abuja have given the green light to a $13,000 million pipeline project to transport Nigerian gas across the Sahara to Europe. Approval for the 4,188-kilometre-long pipeline, which is being developed by a consortium of Algerian state energy company Sonatrach and Nigerian National Petroleum Corporation (NNPC), was announced in Algiers in late September following the completion of a feasibility study by an international team led by the UK's Penspen (MEED 28:7:06).
The proposed pipeline will begin in Brass, in south Nigeria, and pass through Niger to Beni Saf on the Algeria coast, from where gas will be piped to Almeria in Spain. The pipeline will have capacity of 2,000-3,000 million cubic feet a day (mcf/d) and is estimated to cost $10,000 million. A further $3,000 million will be invested by Nigeria in the development of gas gathering and treatment facilities. According to the study, the project would be viable at a gas price of $4.15 a million BTUs.
In addition to the 48-54-inch-diameter trans-Saharan link, the 48-month construction project would involve at least three new sub-Mediterranean pipelines parallel to the 774 mcf/d Medgaz pipeline - due to open in 2009 - and of a similar capacity. It would also call for about 20 intermediate compressor stations. Feedstock will come from existing fields in Nigeria that have been capped.
Completion of the proposed pipeline is targeted for 2015, from which date the study concluded there will be a European market for the gas. 'There is a window of opportunity from 2015 to supply 20,000 million cubic metres [706,000 million cubic feet] a year to the European market,' said Algeria's Energy Minister Chakib Khelil.
The feasibility study, carried out by Penspen in consortium with NKUK - the UK-based subsidiary of Japan's Nippon Koei - and IPA Consulting, also UK-based, identified no insuperable barriers to the project, but the proposals will nevertheless have to take into account an increasingly strong market for liquefied natural gas (LNG) and the risk of civil unrest in the Niger basin.
Extensive preparatory work will be required before the project can get under way. Legal and financial assistance is expected to be solicited to set out the fiscal terms and institutional basis for the project and commitments will be sought on the supply and offtake of the gas. The next meeting on the pipeline is set to take place in November in the Niger capital of Niamey.
'There is no doubt that the project is feasible and has a market,' said Nigerian Energy Minister and current OPEC secretary-general Edmund Daukoru. 'The question is not one of where to find the gas - the reserves exist - but one of investment. Nigeria is committed 100 per cent to this project. We need the international community to set the project in motion at a time when it is concerned with the security of energy supply.'
The Penspen team was awarded the $2 million contract to carry out the feasibility study in May 2005. Sonatrach and NNPC signed a memorandum of understanding on the project in January 2002. European gas demand is set to reach 8.5 trillion-8.8 trillion cubic feet a year by 2015.
