March 06, (THEWILL) – As with every other time of crises in human history, every period of strife presents an opportunity for the intuitive and foresighted to find levers to pull that will guarantee both short-term and long-term benefits to them.
The current global climate, affected as it is by the Russian invasion of Ukraine, is another vivid exemplification of this evergreen truism. Since the invasion began on Thursday, February 24, the most perceptive of leaders in the business, economic, political, social and technological spheres have concerned themselves with seeking opportunities unearthed by the crisis to better position themselves as leading lights in the eventual and corresponding process to seek solutions to these crises at the appropriate time. It is in this class of solution-providers that I believe Nigeria ought to belong in the response to the Russo-Ukraine War of 2022 and I believe that the best bet for the country’s role in the picture is as an alternative source of gas supply for Europe.
This is apposite for a plethora of reasons, but the most pertinent is how the Vladimir Putin-led invasion of Ukraine once more highlighted the overarching need for Europe to wean itself from over-dependence on Moscow for the bulk of its energy supplies. In the debates over which sanctions to impose on Russia, Europe could not decide on crippling Russia’s mainstay, her energy sector, because several countries rely on energy imports from Russia, at differing percentages, to keep production levels optimal and survive the wintry chill of the current climate. Yet, without that back-breaking sanction, Putin can keep up his ambitious “Greater Russia” project going for the foreseeable future while seeing out other economic sanctions by transacting business with the world’s second largest economy and partner, Xi Jinping’s China.
Remarkably, foresighted European leaders, who have always seen the dangers of over-reliance on Russia for energy needs but have belaboured over bureaucratic redtapism, have become even more determined to seek alternatives to the Russian supply as quickly as possible. Working on a state-by-state basis and under the umbrella of the European Union, these leaders are initiating measures to change their strategic energy policies in order to reduce their vulnerability to energy security and Russian one-upmanship. The objective is to cut down Europe’s current one-third dependence of its natural gas from Russia, which varies from one country to another with Italy (40 per cent), Germany (50 per cent), Estonia and Finland (100 per cent), while Spain and Portugal have zero gas imports from Russia.
Although, a blanket ban on Russia today will not immediately spell doom for European states that are heavily reliant on Russian gas, because they have reserves in stock believed to be sufficient for the current wintertime, the goal is to ensure that a fresh Putin incursion into another sovereign country can be met with crippling sanctions that do not compromise their no-nonsense stance or present domestic energy challenges.
Herein lies the Nigerian opportunity and, with it, the means to seize the chance opening before us. On Wednesday, February 2, at the 2022 Nigeria International Energy Summit (NIES) held in Abuja, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) revealed that Nigeria’s proven natural gas reserve had risen to 209.5 Trillion Cubic Feet (TCF) as of January 1, 2022. Farouk Ahmed, NMDPRA Chief Executive, who was represented by Ogbugo Ukoha, executive director, Distribution Systems, Storage and Retailing Infrastructure, (NMDPRA), made this known and noted that the new figure represented a major increase of 2.97 TCF in proven natural gas reserves, which, of itself, represented a 1.42 percentage increase from the 206.53 TCF recorded on January 1, 2021. Such cheering growth, together with the prospects for continued increase, come at the most auspicious moment, given the possibility of buying into the current European need for alternative sourcing of gas. Furthermore, not only is Nigeria primed to offer a viable option for Europe, there is already in place a means to bring this viability to life.
In January 2002, the idea of a Trans-Saharan Natural Gas Pipeline that was first mooted in the 1970s, came alive when the Nigerian National Petroleum Corporation (NNPC) and the Algerian national oil and gas company, Sonatrach, signed a Memorandum of Understanding for preparations of the project. Aimed at enabling Europe to tap into West Africa’s abundant natural gas supplies, the pipeline included the northernmost Nigerian neighbouring country of the Republic of the Niger for two excellent rationales. The pipeline was going to link through its borders to get from Nigeria to Algeria and it was expected to boost exploration in Niger and expand its energy industry. The 4,128-kilometre pipeline, with 1,037 kilometres in Nigeria, 841 kilometres in Niger, and 2,310 kilometres in Algeria, and a capacity of 30 billion cubic metres of natural gas per year, will connect the Warri region in southern Nigeria, through the length of Niger to the town of Hassi R’Mel in northern Algeria, where it will connect to existing Trans-Mediterranean, Maghreb-Europe, Medgaz, and Galsi Pipelines, allowing Europe to tap into West Africa’s abundant natural gas reserves and diversifying its supply.
The process to get the project off the ground began in June 2005 when the NNPC and Sonatrach signed a contract with Penspen Limited for a feasibility study of the project. The feasibility study was completed in September 2006 and it found the pipeline to be technically and economically feasible and reliable. Yet, it was not until 2009, when after a February 20 meeting, the NNPC and Sonatrach agreed to proceed with the draft Memorandum of Understanding between three governments and the joint venture agreement. The intergovernmental agreement on the pipeline was signed by Energy Ministers of Nigeria, Niger and Algeria on July 3, 2009 in Abuja. The pipeline was expected to be built and operated by the partnership between the NNPC and Sonatrach, both of whom will hold a combined share value of 90 per cent and the Nigerien Government, which will hold the remaining 10 per cent. It was to be operational by 2015 and cost approximately USD 10 billion to get running.
Yet, it was not until February 16 this year, six whole years after it was supposed to be running, that the development of the multi-billion-dollar pipeline began, following the signing of the Declaration of Niamey by the Republic of Niger’s Minister of Petroleum, Energy and Renewable Energy, H.E. Mahamane Sani Mahamadou; Algeria’s Minister of Energy and Mines, H.E. Mohamed Arkab; and Nigeria’s Minister of State for Petroleum Resources, H.E. Timipre Sylva. The signing of the Declaration took place during the third edition of the Economic Communities of West African States Mining and Petroleum Forum in the Republic of Niger’s capital city of Niamey. Despite this unfortunate setback, work must be accelerated especially now that Europe is looking at Africa’s gas potential, with the continent known to possess approximately 8 per cent of the world’s natural gas reserves that have remained largely untapped with very minimal local consumption levels.
This is the most opportune moment to take advantage of a gas market that is ripe for harvesting. The rising gas reserves of Nigeria and Niger and Algeria’s strategic position along the Mediterranean coast, as well as the continent’s connections with existing pipelines and those already under construction in Spain and Italy, combine to make the Trans-Saharan Natural Gas Pipeline a most strategic resource to serve as a long-term alternative gas supply option for Europe countries in their determination to wean themselves off Russian energy subservience and a more belligerent Putin. The importance of the pipeline solution was laid bare when the Russian multinational natural gas company, Gazprom, sought to negotiate with Nigeria, regarding its possible participation in the project. It highlighted the unambiguous value of the pipeline and put its profitability, as confirmed by the feasibility studies, in starker relief, if it ever were previously in doubt. All obstacles towards an accelerated completion of the project must therefore be surmounted to get it operational at the earliest possible time and present to Europe the alternative it seeks and the dollars Nigeria urgently needs.
The need for urgency cannot be overemphasised. Europe’s energy needs cannot wait forever for the typical African bottlenecks to development and growth that bedevil progress on the continent.
Should the trio of Nigeria, Niger and Algeria tarry, Europe will waste no time getting their needs met either of their own accord or through other options that exist on the African continent and that are ready to expedite action as required. Already, German Chancellor Olaf Scholz has declared that the country was shifting course “in order to eliminate our dependence on individual energy suppliers” with the construction of two liquefied natural gas import facilities in Brunsbuettel and Wilhelmshaven, as well as accelerating the construction of renewable energy capacity in order to achieve 100 per cent renewable power generation by 2035. For European countries still needing gas supply options, there are alternatives like Senegal, where 40 trillion cubic feet of natural gas were discovered between 2014 and 2017 and where production is expected to start later this year.
Following the EU’s announcement that natural gas projects will be labelled as “green” investments, the Trans-Saharan Natural Gas Pipeline must be seen as an opportunity for the EU to not only diversify its energy mix, but also to help address the continent’s ongoing energy crisis, with rising natural gas prices driving up demand and putting supply at risk. This is an opportunity that Nigeria cannot allow to go to waste and the Ukrainian invasion, which has united Europe in the search for third-party alternatives to their over-reliance on a hostile Russia, presents a clear chance to take full advantage of for a guaranteed future of foreign exchange earnings that will complement earnings from other sectors of the economy. It will mean that Nigeria will have seized the moment and gained from a crisis of far-reaching implications for Russia-EU relations in a way that has never been recorded previously.
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