NIGERIA - Europe-Bound & African Pipelines.

Abuja and Algiers are working on a long-dormant project to have a $7-8 bn gas pipeline to Europe running from Ajaokuta in central Nigeria to pass through Abuja and Kano in the north. It will then cross Niger to southern Algeria and link up with Algeria's line to Europe through Spain.

The capacity of this project will depend on technical, economic and marketing feasibility studies - as well as policy issues, international framework and environmental studies - now being carried out by London-based Penspen. This is according to a contract which the pipeline specialist signed in early May 2005 with NNPC and the state-owned Sonatrach of Algeria. The studies should be ready by end-February 2006. Penspen is working on these studies with IPA Energy Consulting, based in Edinburgh.

The project is promoted under the New Partnership for Africa's Development (NEPAD), to which the OECD nations are committed as financial backers.

After more than a decade of talks, in August 1998 a consortium of Chevron, Shell, NNPC, Ghana National Petroleum Corp. (GNPC), Societe Beninoise de Gaz (SoBeGaz) and Societe Togolaise de Gaz (SoToGaz) signed an agreement for a feasibility study on the West Africa Gas Pipeline (WAGP). Completed in March 1999, this concluded its commercial and technical viability.

An accord naming Chevron as the $590m WAGP project manager was signed on Aug. 16, 1999. In February 2003 the four states signed an agreement on implementation of the WAGP. The 20-year treaty contains a legal, fiscal and regulatory framework, and names a single authority for implementation of the project. The WAGP partners are Chevron (38.2%), NNPC (26%), Shell (18.8%), and Ghana's Takoradi Power (17%).

The WAGP will run 1,033 km offshore and onshore from Nigeria's Niger Delta to its terminus in Ghana, with the length of the export line being 678-km. The first part - the Escravos-Lagos line - started up in 1989 supplying gas to the Egbin power plant and other industrial consumers in Lagos and Ogun States. A 57-km onshore part of the WAGP runs from Alagbado to Seme beach in Lagos State. It will continue offshore, with landfall spurs at Cotonou (Benin), Lome (Togo), Tema (Ghana), Takoradi (Ghana) and Effasu (Ghana).

The pipeline will be on stream in late 2006. This will have an initial capacity of 200 MCF/day. It will expand to 450 MCF/day in the second phase and to more than 600 MCF/day later on as demand grows.

The JV entity in charge is a Chevron-led West African Pipeline Co. (WAPCo). This and the national power utilities in Ghana, Togo and Benin in June began the pipe-coating process. Bredero Shaw will undertake pipe-coating at Tema port in Ghana. A committee of ministers representing Nigeria, Benin, Togo and Ghana in April formally issued the licence to WAPCo Board Chairman and NNPC Group Managing Director Funsho Kupolokun.

WAPCo is to begin gas delivery to the three markets in December 2006. This will significantly advance the goal of zero gas flaring in the Niger Delta. Willbros has been awarded contracts worth in excess of $150m relating to this project.

The World Bank's Multilateral Investment Guarantee Agency (MIGA) and International Development Association (IDA) in 2004 approved $125m to support construction of the 678-km export section of the line. MIGA was to provide $75m over a 20-year period. The IDA was to guarantee $50m for 22 years. The key unlocking the deal was MIGA's decision to guarantee 90% of Ghana's $83.4m investment in WAPCo against the risk of any breach of its commitment. The African Development Bank is lending $460m for the project.