Nigeria’s state oil company says that Nigeria, Algeria and Niger have signed an agreement to create a $10 billion trans-Saharan gas pipeline to ship gas to Europe. Managing director Mohammed Barkindo said July 3 the project was approved by energy ministers from all three governments.

Implications
The European Union, which has whole-heartedly given its support to the project, sees it in terms of both security of supply for the future and also in terms of diversity of supply to further distance Europe from Russian gas imports. With the other EU sponsored pipeline (Nabucco) not moving anywhere fast, is this a case of a “pipe too far”?

Analysis
This trans-Saharan pipeline project has its roots way back in 1970s but didn’t actually get moving until 2002 when a memorandum of understanding was signed between the two key NOCs, the Nigerian National Petroleum Company and Sonatrach (Algeria) under the auspices of the New Partnership for Africa’s Development (NEPAD). Further work in 2005-6, produced a feasibility study which gave it the “all clear” from an economic viability perspective, as well as technically. Completion and first gas is being projected as 2013.
We know that on-shore gas pipeline transportation has a cut-off point at around 4000km length when the economics would move strongly in favour of alternative means of transport (normally via LNG). So how does this trans-Saharan pipe stack up? Initial studies put the entire new pipeline of 48/ 56 inches at around 4200km (2800miles) to possibly 4400km long, crossing three countries – Nigeria, Niger and Algeria – before connecting to the existing (and enhanced) Algerian Sonatrach pipeline system. From plans and geography this would indicate around 1000km (644miles) in Nigeria, about 840km (523miles) through the Republic of Niger, and a longer stretch of some 2300km (1440miles) in Algeria. I might also add that it is “normal” to have compression station about every 250 to 350km along the total length of the pipeline – even assuming that the terrain is flat this equals around 14 compressor stations, some of which will literally be in the back of beyond.  This must be close to a distance when the commercial economics become questionable – but, this is not strictly a commercial pipeline as there is a lot of political backing and requirement for it to succeed.
The EU position is clear as this new pipeline will, via Algeria, be able to supply some 20.5bcm per year of gas (also quoted elsewhere as 3bcf/day) via the sub-sea TransMed & MedGaz pipelines into Spain and via the sub-sea Mahgreb and (new) Galsi pipelines into Italy. The African nations also have a large stake in this too as they feel it will have a “multiplier effect” for all their countries and the region. Nigeria has pre-allocated some 13 to 15tcf of gas reserve to this project. 
So who is interested and what kind of cost?
Taking the cost issue first there are various quoted figures between $12 & 20bn – what is known is that the pipeline will cost somewhere in the region of $12 to 15bn and then there is an additional cost of possibly >$3bn for the gas gathering systems in Nigeria. This is not a project for the faint hearted.
As to who is interested, apart from the three NOCs, there are also clear indications from Total, Shell, Gazprom and India’s GAIL that they’d all like a bit of the action.
I’m not going to make any predictions here except to say that this is the “mother of all pipeline projects”, it is going to be difficult and costly to build and the date of 2013 looks pretty optimistic. When it actually operates Europe will again find itself hostage to “transit nations” much like the Russia-Ukraine situation so the issue of security of supply must be questioned. Of course, there is also the vast potential for terrorism and sabotage virtually everywhere along its entire length. Is this another grand-stand play or is it a real project? Time will tell but I think that as the African countries see real benefit in it and the major IOCs and international NOCs seem keen as well it may well come down to getting investment money, or lack of it in present climate.