Page 5 - DMEA Week 05 2021

DMEA COMMENTARY DMEA

are home to violent terrorist groups such as West African countries that have large gas
the Islamic State in West Africa (better known reserves of their own. Senegal and Mauritania,
as Boko Haram) and Al Qaeda in the Islamic for example, have discovered enough gas in
Maghreb (AQIM). Grand Tortue/Ahmeyim (GTA), a group of off-
shore blocks that straddles the maritime border
NMGP ambitions between the two countries, to support an LNG
Some years later, Nigerian authorities came out project. They may lobby for the right to feed their
in favour of a different pipeline project – namely, own production into the NMGP system in the
NMGP. hope of joining Nigeria and Morocco in export-
In December 2016, state-owned Nigerian ing gas to Europe.
National Petroleum Corp. (NNPC) signed For another, it is almost certain that the $25bn
an agreement with its Moroccan counterpart, cost estimate is too low – despite ECOWAS’ sug-
Office National des Hydrocarbures et des Mines gestion in late 2020 that Nigeria and Morocco
(ONHYM), on the construction of a massive explore the possibilities for synergy with West
system of offshore pipelines connecting every African Gas Pipeline (WAGP), the operator of an
state along Africa’s western coast. It envisioned existing offshore pipeline network linking Nige-
a 5,660-km network capable of pumping Nige- ria, Benin, Togo and Ghana. There are many fac-
rian gas to Benin, Togo, Ghana, Côte d’Ivoire, tors that could drive the final price up, including
Liberia, Sierra Leone, Guinea, Guinea-Bissau, but not limited to legal battles with environmen-
Gambia, Senegal, Mauritania and Morocco and tal groups, marine security measures to protect
then extending across the Mediterranean into the NMGP system from piracy, the technical and
Spain, thereby enabling exports of West African logistical difficulties inherent in subsea pipeline
gas to Europe. construction.
Since then, NNPC and ONHYM have made Meanwhile, there are questions about
some progress. They launched a feasibility study whether gas demand is sufficient to support a Nigeria and
in August 2017 and wrapped it up in January project of this scale. Currently, Nigeria and other
2019, saying they had calculated the price tag for West African states are still working to recover Morocco may
building the pipeline system in multiple stages from the damage they sustained as a result of not be able to
over a period of 25 years at $25bn. Also in Jan- the coronavirus (COVID-19) pandemic, which
uary 2019, they signed a contract with Penspen has had a dramatic (and negative) impact on make a strong
(UK) on first-stage front-end engineering and global energy consumption and pricing. As a
design (FEED) work. result, they will have to recalibrate their fore- case for spending
Later in the same year, the two national oil casts for future gas demand in the region. Addi-
companies (NOCs) presented their plans at a tionally, European gas consumption is likely to so much money
special meeting of the Economic Community of decline over the long term as a result of efforts on such a
West African States (ECOWAS). In 2020, they to reduce net carbon emissions to zero. This
moved on to the second stage of FEED work and means that there may not be room for large vol- large-scale and
continued to seek ECOWAS’ support for the umes of African gas on the European market in
project. 25 years, especially since European consumers complex project.
And now, as noted above, the leaders of will already have access to many other supply
Morocco and Nigeria have reiterated their sup- sources.
port for NMGP. Under these circumstances, NMGP’s chances
of success do not appear to be high. Certainly,
Reasons for doubt Nigeria and Morocco could retool their plan,
These are all positive signs, but they do not eliminating the goal of launching pipeline
amount to concrete evidence of progress. That exports to Europe and focusing instead on Afri-
is, they don’t demonstrate that NNPC and can gasification and electrification initiatives of
ONHYM are ready to start laying down pipe the type espoused by the African Energy Cham-
– or even to start making plans to lay down ber (AEC). Even if they did so, however, they
pipe. might not be able to make a case for spending so
There are plenty of good reasons to hesi- much money on such a large-scale and complex
tate. For one thing, Nigeria’s hope of becoming plan – especially when Nigeria is not the only
a major supplier of gas to other states in West party that can supply gas to West African con-
Africa and Europe may not sit well with other sumers. ™

ECOWAS has pointed
to the possible
benefits of a tie-up
with the West Africa
Gas Pipeline (Image:
WAGPCO.com)

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