Algeria, Niger, and Nigeria held talks on June 20 and 21, 2022 in the Nigerian capital Abuja on the revival of a decades-old project to pipe gas across the Sahara, a potential opportunity for Europe to diversify its gas sources, media reported. Alegria’s Minister of Energy and Mines Mohamed Arkab said the meeting was “important and successful”, setting the “first building block” for a project that’s been just an idea for over 15 years. It was agreed to continue consultations through the technical team that was formed in Abuja and tasking it to prepare the necessary feasibility studies for the project. It was also agreed that the three ministers should meet again no later than the end of July in Algeria.
Reviving an old idea
The Trans-Saharan Gas Pipeline (also known as NIGAL) idea was first proposed in the 1970s. The potential of supplying the European market is promising, especially seeing recent development in the Russo-Ukrainian war. Noting Europe’s desire to move away from depending on Russian energy, Nigeria’s Minister of State for Petroleum Resources Timipré Sylva said that “it is a very good time for [the participating countries] to take advantage of very high gas prices globally,” believing the project would boost economic growth on the African continent.
NIGAL’s history, economic potential, and the political context in which it is being pursued can be summarised as follows:
1. Trilateral meeting in Abuja:
Nigerian Minister Timipré Sylva hosted his Algerian and Nigerien counterparts, Mohamed Arkab and Abubakar Aliyu, in Abuja where they discussed the project following a ‘Declaration in Niamey’ signed earlier in February to explore its feasibility.
2. Decades-long idea:
The idea was first proposed more than 40 years ago and in 2002 the Nigerian National Petroleum Corporation (NNPC) and Algerian national oil and gas company Sonatrach signed the Memorandum of Understanding for preparations of the project, but progress stalled owing to low demand and Nigeria’s long-delayed new energy reform law, the Petroleum Industry Act.
In 2009, NNPC and Sonatrach agreed to proceed with the draft Memorandum of Understanding between three governments and the joint venture agreement. Progress stalled once more but the project was discussed again in 2016 during the 27th African Union Summit. Another meeting was held in 2021 where the. Nigerian minister said his country was ready to commence the project having completed a feasibility study and decided on the pipe’s route. A roadmap for the estimated $13bn tripartite project was signed in Niamey last February.
3. A tumultuous global market:
Since the outbreak of war between Russia and Ukraine, Algeria has expressed a willingness to increase natural gas exports in line with diminishing demands, rising prices, and Europe’s goal to free itself from its dependence on Russian gas.
Revelry also is intensifying with neighbouring Morocco. Both countries are competing for influence in Africa, forging energy and political alliances across the continent to secure their interests.
Extended repercussions
Algeria’s extensive diplomatic efforts towards reviving NIGAL with Nigeria indicate a series of shifting strategy by the northern African country, summarised in the following:
1. Intensifying Algerian Moroccan rivalry:
Morocco has been working in parallel on a strategic gas pipeline of its own. Seen by Algeria as direct competition to its national ambition, Morocco signed an agreement with NNPC to build a line that would potentially connect Nigerian gas to every coastal country in West Africa. Days earlier, Nigeria’s parliament had approved NNPC’s agreement with the Economic Community of West African States (ECOWAS) to finance the Abuja-Rabat pipeline.
The Nigeria-Morocco proposal was signed December 2016. King Mohammed VI visited Abuja where he officially inaugurated the project. The line would connect Abuja to Rabat through 11 countries, and extend to Spain and Europe, trailing more than 5660km. The $25bn pipeline is expected to have an annual capacity of more than 40 million cubic metre year. A feasibility study was carried out in 2017, and an official agreement was signed during a visit by Nigerian President Muhammadu Buhari to Rabat in 2018.
As the diplomatic rift between Algeria and Morocco got bigger, and following the shutdown of Algerian gas supplies to Europe through Morocco, interest has risen in the Nigerian project. Both countries appreciate the huge potential of a European market and want to seize the strategic opportunity for decades to come. Revealing the rivalry between the country was the statement by Algeria’s minister of energy, who said Morocco’s project face dire financial and security challenges – as opposed to the Algerian line which could be completed in just three years.
Similarly, Moroccan officials have insinuated to the serious security issues facing Algeria’s pipeline which runs through the Niger Delta. They have also pointed to Algeria’s strengthening relations with Russia. Such comments come following recent crisis between Algeria and Spain over the ongoing dispute over Western Sahara, which some experts have said Algeria may be using gas as a political weapon to sort out its differences with the EU member state.
2. A lucrative EU market in sight:
NIGAL is planned to connect Warri in Nigeria with Europe through Algeria and Hassi R'Mel in Niger, a long route that nearly 4128km including 2310km through Algerian territory. The pipeline is projected to transfer nearly 30bn cubic metre per annum.
Algerian prime minister has been keen to reassure EU and Germany especially of Nigeria’s ample gas reserves, clarifying that the current setback for the Algerian-Spanish relations would not affect his country’s gas supplies to western Europe. Although, he has indicated Algeria may be revising the prices of gas sold to Spain.
3. Nigeria’s unclear position:
It seems Nigeria has two competing projects in hand. But latest analysis suggest Nigeria might press ahead with both projects as it is keen to penetrate the European market and capitalise on the global shortage and soaring gas prices flared by the ongoing Russo-Ukrainian war.
To that effect Abuja has been keeping a delicate balance to its relations with both countries. Having signed MOUs with both countries, Nigeria seems to be adopting a strategy of active waiting until the feasibility studies are completed, upon which Abuja would base its final decision.
4. Africa’s new gold:
Energy has become Africa’s new-found opportunity in light of a global crisis. Aware of its great potential, African states have begun investing heavily in energy infrastructure, which would increase the continents reliance on oil and gas exports in the coming years.
Yet this would mean an increased presence of global powers in the continent. Securing energy supplies would become a key priority for importers, which may consequently drive foreign competition and spark an adverse effect.
Finance and security challenges
Both Algeria and Morocco’s projects face a series of challenges that could be summarised in the following:
1. Funding availability:
Algeria and Nigeria have not been impervious to serious economic crisis, making their project prone to much higher risks. Many external factors are at play. Most notably, several foreign investors including Russia have expressed their interest in the Morocco-Nigeria line. Nigeria’s Minister of State for Petroleum Resources Timipré Sylva confirmed that the ECOWAS is committed to finance the Morocco-Nigeria project.
Moreover, the OPEC Fund for International Development has announced a $14.3mn to fund the project; the Islamic Development Bank also has announced its willingness to invest in the project. Yet at an estimated building cost of $25bn the project faces real financing challenges despite attracting foreign investors thus far.
2. Exorbitant security costs:
The 11 countries through which the Morocco-Nigeria line route is planned suffer from an increased activity of myriad terrorist groups, posing serious security risks on the project. By comparison, the Algeria-Nigeria line is relatively more secure, but it runs through the Niger Delta which has been the flashpoint of security unrests in the past, though remaining relatively more manageable than the Morocco-Nigeria line. Overall, both projects face grave security concerns, though the risk is much greater in the case of the latter, considering the route runs through more countries.
In summary, Algeria and Morocco’s ambitions could be viewed as an extension to their decades-long rivalry. Abuja’s strategic goal is to establish a strong presence in key EU markets, and whether this goal is achieved in partnership with either country does not seem to bear much weight on Nigeria’s strategic approach. On the contrary, this ongoing rivalry may drive these two adversaries to cooperate, which would be unlikely otherwise, ultimately serving Abuja’s economic aspirations. EU, in turn would benefit largely from such a cooperation – if it were to transpire, that is.
