Niger coup could jeopardize oil production boost, create regional security vacuum

A military takeover in Niger, the latest in a string of coups to grip Africa's Sahel region, could jeopardize the African country's plans to become a significant oil producer and exporter, analysts and industry sources have told S&P Global Commodity Insights.

Nigerien President Mohamed Bazoum, elected in 2021, was still confined to his home by members of the presidential guard on July 28, two days after soldiers took to state television to announce his overthrow.

Niger, a key Western ally and security partner and one of the world's biggest uranium producers, pumps around 20,000 b/d of oil, most of it from China National Petroleum Corp. projects in the Agadem Rift Basin in the country's southeast. The country's crude is used locally or transported by road to neighboring Nigeria.

However, Niger is on the verge of a long-awaited production surge, with CNPC due to complete the 110,000 b/d Niger-Benin export pipeline this year. In March, Niger's oil minister said it was 75% done.

The conduit linking Koulele in Niger to the port of Seme in Benin will transform Niger into a significant regional oil producer and exporter, according to a 2019 national petroleum plan. The country is believed to be sitting on a billion barrels of crude reserves, according to the African Petroleum Producers' Organization.

An industry source said the pipeline would be a "game changer" for Niger, but said they were "waiting to see what happens" with the coup, noting it was "early days".

Aneliese Bernard, director of Strategic Stabilization Advisors, a Washington-based consultancy focused on security issues, and a former State Department official, said the pipeline should not be affected in the short term.

However, Bernard warned that following coups in neighboring Mali and Burkina Faso, "[as] the transitional authorities leaned further into authoritarianism and Russian influence, the governments abruptly nationalized the gold mines, pushing industrial giants out."

London-listed Savannah Energy, the only Western oil company in Niger, plans to begin commercial oil production next year at its R3 East development, which covers the Amdigh, Eridal, Bushiya and Kumana finds, producing 1,500 b/d initially and ramping up to 5,000 b/d. The company also says it has identified 163 exploration targets in its acreage.

"The companies invested in oil and Uranium might face increasing obstacles to preserving their operations, but these businesses have also weathered coups in Niger in the past, as this was the fifth coup since Niger's independence in 1960; the last coup was in 2010," Bernard said.

Jim Burkhard, head of research for oil markets, energy and mobility at S&P Global, said this week's coup could challenge Niger's plans to become a regional oil producer.

"Niger has been a key partner of Western countries, including the United States, in combatting terrorist groups in the Sahel," Burkhard said. "Instability in Niger raises questions about that ongoing partnership -- as well as Niger's efforts to boost oil production and exports."

Security vacuum

The seventh coup in West and Central Africa since 2020 was orchestrated by General Abdourahamane Tchiani, head of Niger's presidential guard. Mali and Burkina Faso saw the same fate in 2020 and 2022, respectively.

On July 28, Tchiani appeared on state television arguing the rebellion had been necessary to quell insecurity in the country and lamenting the lack of collaboration with military governments in Burkina Faso and Mali. Alex Vines, head of the Africa program at Chatham House, told S&P Global that the evolving situation is at its heart "an internal elite dispute."

Niger has in recent years become central to Western efforts to fight insurgents in the region, while Mali and Burkina Faso have pursued closer ties with Russia.

The coup was swiftly criticized by the West African bloc Ecowas, the African Union and the governments of France and the US.

Bernard warned instability in Niger could "create a security vacuum that risks destabilizing the entire sub-region," and could allow terrorist organizations to expand into coastal West Africa, including emerging oil producers Ghana and Cote d'Ivoire.

"This situation with Niger could mean that the last remaining buffer between the Sahel jihadist insurgency and the coastals is gone," she said.