Algeria, Niger, Nigeria pledge acceleration of work on Trans-Saharan gas link

The energy ministers of Algeria, Niger and Nigeria pledged June 20 to accelerate work on the development of a Trans-Saharan gas pipeline designed to carry 30 Bcm/year of gas to the European market.

On the drawing board for decades, the three countries decided in February to revive the stalled $13 billion project with the so-called Declaration of Niamey.

With a length of 4,128 km, the pipeline would link Warri in Nigeria to the major Hassi R'Mel gas hub in Algeria, passing through Niger.

At a meeting June 20 in Abuja, the three ministers -- Algeria's Mohamed Arkab, Niger's Mahamane Sani Mahamadou and Nigeria's Timipre Sylva -- agreed to begin development work on the project, according to Algeria's state news agency APS.

Arkab said the ministers pledged to realize the project in "the shortest possible time" and to take the first steps through the start of technical studies.

Algeria and Nigeria signed a memorandum of understanding for the pipeline in 2002, but it made only limited progress due to delays in the passage of Nigeria's oil sector reform law, the Petroleum Industry Bill, which was finally passed in July 2021.

However, with the current global energy crisis and European efforts to phase out Russian gas imports, the stalled project is seen as an opportunity to monetize Nigeria's vast gas resources and help meet European demand.

"Upon completion, the pipeline will carry 30 Bcm of gas yearly from Nigeria, Algeria and Niger to European markets via Algeria's strategic Mediterranean coast," the Declaration of Niamey read.

"The pipeline will enable Europe to tap directly into the three countries' significant gas reserves, thus diversifying its supply in the wake of the current energy crisis, while creating critical sources of revenue for African gas markets."

Algerian infrastructure

Algeria currently delivers pipeline gas only through the Medgaz line to Spain and the TransMed link to Italy after the GME pipeline to Spain via Morocco was idled in November. It also exports LNG from sites at Arzew and Skikda.

Large-scale exports of Nigerian gas out of Algeria to Europe could require new infrastructure to Europe.

Much of the estimated $13 billion pipeline cost will be spent in Niger, enabling the country to monetize its own recoverable gas reserves estimated at 24 Bcm.

With gas and LNG prices globally having reached record highs in recent months, the monetization of gas is more attractive than ever.

The TTF front-month contract reached a record high of Eur212.15/MWh March 8, according to Platts price assessments by S&P Global Commodity Insights.

The contract was last assessed June 20 at Eur122.53/MWh, still up by 315% year on year.

Nigeria's Sylva, quoted in local media, said it was "more important than ever" to take gas to the European market. "Let us not waste time, let us fast-track this project," he said.

Gas policy

The Trans-Saharan pipeline is not the only project that Nigeria is involved in for expanding its gas export capacity.

It is also part of the Trans-African Pipeline project designed to send Nigerian gas up the West African coast to Morocco and on to Spain.

The governments of Nigeria and Morocco in 2016 announced the development of the new regional pipeline, which would run for an estimated 4,000 km, requiring the participation of up to 13 other countries.

Nigeria has made gas a cornerstone of its energy policy for the 2020s, saying last year it was focusing not only on fully developing the country's estimated 203 Tcf of existing proved reserves, but harnessing a potential of up to 600 Tcf in unproven resources.

It is already a key LNG supplier to Europe and in 2021 exports amounted to 12.6 Bcm, according to data from Platts Analytics.

The biggest buyers were Spain with 49 cargoes supplied -- or 4.3 Bcm of gas equivalent -- France (38 cargoes), Portugal (34 cargoes), and Turkey (15 cargoes), the data showed.

Nigeria's six-train LNG export facility has a capacity of 22.5 million mt/year (31 Bcm/year), but is being expanded to 30 million mt/year with the addition of a seventh train.