Page 6 - AfrOil Week 49 2019

AfrOil COMMENTARY AfrOil
The p“
ipeline to Benin has the
potential to create jobs and encourage more investment in Niger
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But Savannah is not just looking to send oil to the Zinder plant for processing. Since 2014, plans have been in motion to build a pipeline to exportoilfromtheAgademBasin.Thesediscus- sions had been ongoing for many years, but they finally yielded concrete results in 2019.
In September, CNPC and the governments of Niger and Benin launched a basin-wide export pipeline project, which is predicted to make Niger into a major oil exporter in the area. They did so after the signing of a Transporta- tion Convention that laid the groundwork for the construction of a crude oil export pipeline from the Agadem Rift Basin to the Atlantic coast in Benin.
Although CNPC is building the export pipe- line primarily for its own production, which is set to reach around 90,000 bpd in the coming years, the project has the potential to turn Niger into a sizeable African oil producer, as the pipe will also be able to carry oil from Savannah’s fields. (In fact, it is anticipated to pass directly through the R3 block.) Ross told NewsBase that under the terms of Savannah’s R1/R2 and R3/ R4 PSCs and the Petroleum Code of Niger, the company is entitled to access third-party infra- structure such as this pipeline. So from Savan- nah’s perspective, she said, it will also provide the company with a significant alternative route to market once it exports its first oil in 2021.
New export route
Both Wafy and Ross joined the government of Niger in hailing CNPC’s decision to build its export pipeline through Benin, rather than moving forward with an older proposal for a link passing through Chad and Cameroon.
Ross described the new route as “an impor- tant infrastructure project for Niger, with huge economic potential for the country.” She also said Niger’s government hoped the project would attract additional investors.
One big difference between the old plan and the new, she added, is that the pipeline to Benin will cross a much larger section of Nigerien ter- ritory than the proposed route through Chad and Cameroon. It therefore has the potential to create many more jobs and encourage more investment in Niger, she said.
Wafy, for his part, described Niger’s relation- ship with Benin as “very good.” The two coun- tries have strong economic ties, since many of the goods imported into Niger must first pass through ports in Benin, he stated. In turn, he added, Benin will benefit from the pipeline, as it has little oil of its own.
Additionally, he said, President Mahamadou Issoufou sees the pipeline to Benin as a starting point for building up the domestic oil sector, not only in the Agadem Rift Basin, but also in other parts of the country. “If we go through Niger and Benin, the majority of the pipeline will cross the whole country of Niger, [thereby] creating an infrastructure-driven exploration. The country has other basins that are in the west where there could be oil, but nothing has been done in these isolated areas. Niger was always
taking the viewpoint that if the infrastructure was to go through the country, it could go and explore those basins too because the infrastruc- turetoexportwould[already]bethere,”hesaid.
Investment and security environment
In general, Wafy stressed that Niger was eager to attract investment and was working hard to establish a welcoming environment for foreign companies. “The government of Niger is very understanding and accommodating to interna- tional investors,” he said.
He also told NewsBase that Niger’s govern- ment had taken a pragmatic approach to issues such as local content requirements. Issoufou’s administration has readily granted Savannah permission to import high-tech goods and equipment that it cannot source within Niger, he explained. “Part of our corporate policy is to work with local contractors whenever it’s possible,” he said. “When it’s a straightforward job, such as civil works, Savannah tries to use Niger companies. We could use a Chinese com- pany that is in the country and providing these services, but we don’t. We choose to use Niger companies whenever it’s possible, and when- ever the project is more complex and the tech- nology is not available in the country, we bring in a contractor ... And each time it has been no problem for the government.”
At the same time, he said, Nigerien authori- ties are also taking steps to ensure security and stability in the oil-producing regions of the country. “The oil sector, for Niger’s government, is a top priority. We have this pipeline project coming within the next two years, and this is expected to significantly boost the country’s GDP, so the government is very focused on maintaining security in the area,” he remarked.
“It’s important to note that CNPC has been in the area for 11 years and in that time they have built a pipeline and a refinery, drilled more than 250 wells, acquired nearly 20,000km of 2D seismic, and during a period of massive opera- tions there have been no security incidents,” he said. “[Similarly], Savannah came in five years ago, and in those five years, we’ve done seismic surveys, we’ve done drilling, we’ve used expa- triate crews in the area – and no problems. And this has been going on for five years.”
Conclusion
Under these circumstances, Savannah expects to keep pushing ahead with its projects in Niger. It also expects the country to succeed in attract- ing further investment. “From the outside, Niger might appear to be a remote place, and poten- tially challenging to operate there. It’s actually completely the opposite,” Ross said.
She added: “They’ve done a huge amount in Niger in such a short period of time. It’s really impressive and speaks to the ease of operating in the country, and we’ve been able to really take advantage of that ... Now that CNPC has started work on its pipeline, I think Niger will become more prominent, and the country has the potential to become a major oil producer™
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w w w . N E W S B A S E . c o m Week 48 11•December•2019