Nigeria and Algeria in the race to quench Europe’s thirst for natural gas

By Conrad Onyango, bird story agency

In less than two months, Nigeria has formalised the revival of two mega projects that will unlock piped routes for its natural gas into Europe.

A Memorandum of Understanding signed between Nigeria and Morocco in mid-September breathes new life into a proposal mooted in 2016 and adds another gas energy supply route for West Africa into Europe.

The 5,600-kilometer Nigeria-Morocco Gas Pipeline (NMGP) will link 15 west African countries to Europe with a capacity to supply about three billion standard cubic feet of gas per day.

Nigeria’s National Petroleum Company described the development as a very important milestone in the history of the two countries and highlighted its capacity to develop and market the project to investors.

“NNPC Ltd is well positioned to progress the project by leveraging on its experience and technical capabilities ranging from gas production, processing, transmission and marketing as well as its vast experience in executing major gas infrastructure projects in Nigeria,” said  NNPC Group Chief Executive Officer, Mallam Mele Kyari.

As Europe scrambles to find alternative gas supplies away from Russia, these two African countries with the biggest natural reserves on the continent are reviving stalled projects and pumping in funds to increase their export capacities.

Nigeria has proven gas deposits of 206.53 trillion cubic feet according to the country’s Department of Petroleum Resources (DPR).

The new project’s supply route will start from Brass Island in Nigeria and run along the West African coastline, through Benin, Togo, Ghana, Cote d’Ivoire, Liberia, Sierra Leone, Guinea, Guinea Bissau, Gambia, Senegal and Mauritania and Morocco.

It will terminate in northern Morocco where it will connect with the existing Maghreb European Pipeline (MEP) that runs from Algeria via Morocco to Spain.

This will be the longest pipeline on the continent and is projected to cost US$ 25 billion. It will be funded by public and private investors, including multilateral and commercial banks.

In late July, Nigeria signed another MoU with Niger and Algeria to revive talks on the development of a 4,128 kilometre-long Trans- Saharan Gas Pipeline (TSGP) mooted four decades ago.

The US$ 13 billion project starts from Warri, Nigeria and runs to Hassi R’Mel in Algeria, to link with other pipelines connecting Africa to Europe. Once complete it will deliver up to 30 billion cubic meters of gas annually.

Over the last two months significant activities – from visits by key European officials to new gas discoveries and financial commitments to boost production – have also been recorded in Algeria’s gas industry.

In June, Algerian oil and gas group Sonatrach announced the discovery of “significant” natural gas deposits of between 100 to 340 billion cubic meters in the Hassi R’mel field, with plans to begin production later in November.

“These volumes constitute one of the largest revaluations of reserves in the last 20 years,” Sonatrach said in a statement.

 A month later, Algeria’s Sonatrach signed a US$ 4 billion oil and gas production-sharing contract with Italy’s Eni, US major, Occidental and France’s Total.

Sonatrach had in January announced plans to invest US$ 40 billion between 2022 and 2026 in oil exploration, production, refining and gas exploration and extraction.

A major highlight, however, has been the warming of ties between Algeria both the European Union and individual countries – Italy and France in particular – seeking to switch Russian gas for Algeria’s, pointing to an impending rise in investor activities.

In August, French President Emmanuel Macron was in Algeria for gas talks, describing efforts by Algeria to help Europe ‘diversify’ its gas sources as a welcome move.

In early September, European Council President, Charles Michel on an official visit to Algeria, described the North African nation as “a reliable, loyal and committed partner in  energy corporation.”

Before the Russia-Ukraine fallout, Algeria, Africa’s largest gas exporter, accounted for about 11 percent of the gas consumed in Europe, compared to 47 percent for Russia. These percentages are expected to shift in the near future.

The International Energy Agency (IEA) in its third-quarter Gas Market 2022 report, makes an assumption that Russian pipeline gas exports to the EU will fall by over 55 percent and by over 75 percent in an accelerated case between 2021 and 2025.

Another report by African Energy Chamber (AEC) forecasts Africa to reach peak gas production at 470 billion cubic meters (Bcm) by the late 2030s, equivalent to about 75 percent of the expected amount of gas produced by Russia in 2022.

This offers Africa a significant market to prop up its gas export revenues.

bird story agency