Economy
Ukraine: Nigeria targets Europe gas market with Nigeria-Morocco pipelines
BY EMEKA EJERE
Nigeria is on course to produce 1,780 billion cubic feet (bcf) in the current year, up from 1,450 billion feet in 2021, setting new prospects to supply Europe, according to report. The latest African Energy Chamber’s (AEC) Q1 2022 Outlook stated that the country, with this development, is expected to be part of a potential supplier to meet demand in Europe.
This is coming at a time Russia and many other investors have expressed interest in investing in the Nigeria-Morocco gas pipeline project that has been on the cards since 2016, according to the Minister of State for Petroleum Resources, Mr. Timipre Sylva. But Russia may be a double loser as sanctions continue to applied against it, and the likely ban on its oil and gas by Europe from June 2022.
Nigeria and Morocco first signed the agreement on the project when King Mohammed VI visited President Muhammadu Buhari in December 2016. Besides linking the two countries, the 5,660 km (3,517 miles) pipeline is also expected to connect some other African countries to Europe.
“Existing producing projects and the projects currently under development in Nigeria are expected to ensure a resilient supply through 2025”, the AEC Q1 2022 Outlook said.“With this portfolio, Nigeria has an advantage for Europe to look up to the West African country as a potential supplier.”
Addressing reporters on Monday in Abuja, Sylva reportedly said, “The Russians were with me in the office last week. They are very desirous to invest in this project and there are lots of other people who are also desirous to invest in the project.”
“This is a pipeline that is going to take our gas all through a lot of countries in Africa and also, all the way to the edge of the African continent where we can have access to the European market as well.”
Sylva said President Muhammadu Buhari’s government hoped to, at least, kickstart the project before leaving office in May 2023.
Strategic but late
Energy experts said the Russia and Ukraine conflict has shown that the conceptualized Nigeria–Morocco Gas Pipeline (NMGP) project could strengthen Nigeria’s economy as many European countries are shying away from Russia’s energy supply.
Analysts believe that with the NMGP, Nigeria will be at an advantage with the current volatile movement in the energy world occasioned by the Russia-Ukraine war and sanctions on the former by the United States and some of its European allies.
A partner at Price Water Coopers (PwC), Pedro Omontuemhen, stated that many European countries will be looking to get their gas supply elsewhere if Russia is no longer dependable. He also sees the NMGP as a national project that is good for Nigeria’s foreign reserve and foreign income.
“Therefore when the economy is right then the project should be supported by any government that comes into power irrespective of parties, politics, and policies.”
However, Bala Zakka, Technical Director-Drill Bits, Template Design Limited wondered why it took both countries so long to “see the light.”
“The alliance between Nigeria and Morocco as far as the gas pipeline is concerned is long overdue,” he stressed, adding that “it is actually coming at the wrong time except if it is for future mutual benefits outside the immediate gas sales opportunities that the Russia-Ukraine crises have created.”
He said both countries could have gained immensely if this project had been conceived earlier.
“With the scuffle going on between Russia and Ukraine, European countries would have turned to Nigeria in particular if she had gone ahead with her Trans-Saharan gas pipeline project vision which was conceived more than four decades ago.
He however, concluded that “the Nigeria-Morocco alliance to come up with a gas pipeline project is worthy of praise and encouragement because it will spur positive changes going forward.”
Meanwhile, there is a growing concern on actions to take as the country’s gas demand is majorly supplied by Russia. In her article for foreign policy: Germany Should Look to Africa for Gas, Not Russia, Vijaya Ramachandran argued that Africa is the country’s best bet for an alternative source for gas.
She said Germany has boxed itself into a corner with its energy policies, especially the replacement of nuclear power with Russian gas, and does not have a lot of options. Her position supports the recent threat by Alexander Novak, Russia’s Deputy Prime Minister, to stop natural gas exports to Germany via the Nord Stream 1 pipeline.
“Sourcing much more gas from Africa – while also helping African countries to meet their own development goals – is something Germany and the rest of Europe can no longer ignore,” she said.
Increasing supplies
Last month the federal government decried the speed at which Europe has been pushing back against investment in fossil fuel, stressing that the Russia-Ukraine war has thought the world a big lesson, especially in the energy sector.
“One of the biggest problems we have in the sector has been investments. In the last 10 years, over $70 billion worth of investments came to Africa. But sadly less than $4 billion came to Nigeria, which is surprisingly the biggest country in Africa. If we cannot attract investments to Nigeria, you know where we are heading,” Sylva told a delegation of the European Union (EU), who paid a visit to his office in Abuja.
Speaking during the courtesy call by EU ambassadors led by Samuela Isopi, Sylva said Nigeria was ready to step in as an alternative gas supplier to Europe but urged the EU to encourage its oil and gas companies such as Shell, Eni, Total Energies among others to scale up investments in the country.
“One of the things we warned against earlier was the speed at which the EU was taking away investments in fossil fuels. We warned that the speed was faster than they were developing renewable energy. You can see now that what we were warning against is what is happening now,” he said.
The minister told the delegation that the absence of fresh investment was stunting the growth of oil and gas in Nigeria and called for a change of attitude if the requests by the EU to increase supplies to Europe are to be realised.
“You have been our longtime friend. As of today, our gas reserve is one of the biggest in the world. We have a proven gas reserve of 206 tcf, and if we focus on gas exploitation we can get up to 600 tcf. Nigeria is, arguably, the best territory to invest in.
“We are already building gas infrastructures such as the Ajaokuta-Kaduna-Kano (AKK) pipeline project, which is expected to take gas to Algeria, and the West Africa Gas Pipeline project designed to take gas to Morocco.”
“As you can see we are already building infrastructure that will take gas to Europe. All we need is investments. We acknowledge that there are challenges in the sector but we should partner to help solve the problems,” Sylva pleaded.
The NMGP project is an offshore and onshore gas pipeline project that aims to transport Nigerian natural gas resources to Morocco via West and North Africa. As a continuation of the existing West Africa Gas Pipeline (WAGP) between Nigeria, Benin, Togo, and Ghana, it is intended to deliver Nigeria’s natural gas resources to 13 countries in West and North Africa. The project will be spread over a 25-year period with an initial estimate of over $25 billion.
Findings reveal that Morocco has started providing financing or secured external funds.The Islamic Development Bank (IsDB) agreed to fund 50 percent of the NMGP project’s Front-End Engineering Design (FEED) Study. The multilateral development finance institution focused on Islamic finance will support the Moroccan contribution and contribute $15.5 million to the project’s financing through the “Service Ijara” operation.
For Nigeria, the IsDB will contribute $29.7 million to the FEED study, which aims to prepare the necessary studies for the gas pipeline and assist in making the final investment decision for the infrastructure project by 2023.Also, the OPEC fund for international development in September 2021 approved a $14.3 million loan to Morocco for the project.