Page 5 - DMEA Week 37 2022

DMEA COMMENTARY DMEA

Meanwhile, with respect to the pipeline, Sylva reported last month to be about 30% complete.
alluded to ongoing discussions on the Trans-Sa- It is due to be finished in 2024, and NLNG can
haran Gas Pipeline (TSGP). This proposed reasonably expect to accomplish the 30% pro-
pipeline would run from south to north through duction capacity increase it is seeking. However,
Nigeria before crossing Niger and continuing to there is a strong possibility that work could fall
Algeria’s Hassi R’Mel field, where it could con- behind schedule due to labour unrest, technical
nect to several gas transportation systems serv- problems, supply chain disruptions and the like.
ing European markets, including the Medgaz And with respect to production, it is truly not
line to Spain and the Trans-Mediterranean line clear whether Nigeria will achieve Sylva’s stated
to Italy. TSGP would have a throughput capacity aim of bringing gas yields up from 8 bcf (226.6
of about 2.092 bcf (82.19 mcm) per day, or 30 mcm) per day to 12.2 bcf (345.5 mcm) per day.
bcm per year. The main reason why it is not clear is that Sylva
According to the minister, Abuja expects did not offer any parameters for this target. For Nigeria’s large-
to make a final decision on this initiative in the example, he did not say how quickly he expected scale gas pipeline
near future. NNPCL and its Algerian counter- output to rise to the higher level, whether he
part Sonatrach will both be involved in building anticipated the new production streams to come projects sound
the pipeline, and Italy’s Eni and other private from greenfield projects or brownfield develop-
companies have shown interest, he said. “Every- ment operations, how much gas was likely to exciting but
body is welcome” to join the project, he added. come from deepwater fields versus shallow-wa-
ter and onshore fields with lower production can offer no
Overstating capabilities costs, whether additional volumes would con- immediate relief
So it seems that Nigeria is planning for two sist of associated gas or natural gas or what kind
large-scale pipelines, an LNG plant expansion of support Nigeria’s government might provide to Europe
and production growth of more than 50%. This to producers. These are not trivial matters; they
is a very ambitious agenda – ambitious enough are important because they help drive develop-
for it to raise the question of how realistic it is. ment strategy. And without further clarifica-
The answer to that question is: probably not tion, it is difficult to comment sensibly on Sylva’s
completely realistic. statement.
With respect to the pipelines, Nigeria is
likely to encounter several possible obstacles. It Little immediate relief for Europe
might be caught up in the ongoing diplomatic The upshot of this is likely to be, NewsBase
disputes between Algeria and Morocco if it tries believes, that Nigeria will make (and is making)
to build both NMGP and TSGP. It is likely to genuine efforts to increase the amount of gas it
have difficulty raising the required financing, produces and exports, particularly to the Euro-
since NMGP is expected to cost around $25bn, pean market.
and TSGP $13bn. (Meanwhile, NLNG’s Train As such, European buyers are likely to
7 expansion project already carries a price tag snap up more Nigerian LNG in the winter
of $10bn). It may face security challenges in of 2022/2023 than they did in the winter of
northern Nigeria and along other sections of the 2021/2022. But volumes may be slow to rise –
transit route. It could find that these roadblocks, and may not swing markedly upwards until the
along other problems that have not been antic- Train 7 project is wrapped up in 2024 or later.
ipated, slow the pace of work so much that by In the meantime, the large-scale pipeline
the time the pipelines are finished, European gas projects touted by Sylva and Kyari will continue
demand will no longer justify their construction. to sound exciting but will offer no immediate
Meanwhile, with respect to the LNG plant results – and no immediate relief to gas-hungry
expansion, this project is in motion and was Europe. ™

Week 37 15•September•2022 www. NEWSBASE .com P5