Renewed EU Support for A Trans-Saharan Pipeline

Courtesy of The Financial Times, an interesting article on the EU’s recent offers of financial and political backing to Nigeria for a €15bn ($21bn, £12bn) trans-Saharan pipeline to pump its gas directly to Europe.  As the report notes:

“…Renewed European interest in the project comes against a backdrop of mounting fears that Gazprom, the Russian gas monopoly, is intent on winning access to Nigeria’s vast gas reserves as part of a strategy to tighten its grip on energy supplies to Europe.

Gazprom, which has also offered to back the planned 4,300km pipeline, appeared to steal a march on its European rivals this month when it signed a memorandum of understanding with the state-owned Nigerian National Petroleum Corporation in Moscow to co-operate on gas exploration, production and transportation.

Andris Piebalgs, the EU energy commissioner, who visited Nigeria last week, admitted that European governments had been slow to back the trans-Saharan pipeline in the past but said the Georgia conflict had focused minds.

“In the EU, particularly after Georgia, there is also a lot of demand from member states to have diversification, real diversification, of supply,” Mr Piebalgs told the FT after meeting senior Nigerian energy officials in Abuja, the capital. “EU governments definitely are worried about having too strong a dependency on Russia.”

Russia, which already supplies a quarter of the gas consumed in the EU, has sought to increase its control by seeking deals with producers such as Nigeria and Libya, and backing moves to form an Opec-style gas cartel.

Russia’s conflict with Georgia, in which it reasserted its influence over energy supply routes through the southern Caucasus, has raised questions over the EU’s plans for the proposed 3,300km Nabucco gas pipeline from central Asia.

Mr Piebalgs said the EU was increasingly keen to promote the trans-Saharan project as an additional option, perhaps by helping to fund feasibility studies and playing a co-ordinating role between host countries Nigeria, Niger and Algeria. The European Investment Bank could help finance the project, he said.

“We need to follow where the Nigerian government is leading us, and the Nigerian government is very clearly leading towards a pipeline,” Mr Piebalgs said. “That means we should be more engaged in the trans-Saharan gas pipeline.”

Mr Piebalgs played down fears that Gazprom would gain a dominant position in Nigeria, saying that much of the country’s gas reserves were already under the control of joint ventures between western majors and the NNPC. “We should not be paranoid about it,” he said.

EU officials say the pipeline could supply 20bn cubic metres a year of gas to Europe by 2016. The bloc consumes some 300bn cubic metres a year but demand is projected to double by 2030, prompting a search for new sources from the Caspian Basin to Iraq and Qatar as domestic production declines.

Sonatrach, the Algerian state oil company, backs the trans-Saharan pipeline scheme but a consortium to finance and build it has yet to emerge.”

This entry was posted on Saturday, September 27th, 2008 at 5:00 am and is filed under Algeria, Nigeria, Sonatrach.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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