The recent coup in Niger and funding challenges on a key domestic pipeline threaten one of Nigeria's most ambitious infrastructure projects — the Trans-Saharan gas pipeline.
This was revealed in a recent report by S&P Global Commodity Insights.
The $13 billion Trans-Saharan gas pipeline project, spanning 4,128 km from Warri in southern Nigeria through Niger to Algeria's Hassi R'Mel gas hub, has been in the works since 2002.
It serves as Nigeria's gateway to the European gas market and is designed to transport 30 billion cubic meters (Bcm) of gas daily.
However, the entire plan faces the possibility of complete collapse following a military coup in Niger in July, which prompted the Nigeria-led regional bloc ECOWAS to consider deploying troops.
Meanwhile, domestic infrastructure woes in Nigeria – particularly on the faltering Ajaokuta-Kaduna-Kano (AKK) pipeline – have led many to question the viability of a project that seeks to link Africa's largest gas reserves with European nations seeking alternatives to Russian hydrocarbons.
"The Trans Saharan gas pipeline project presents an ambitious vision for energy infrastructure in Africa, however, its feasibility faces two critical challenges," said Olufola Wusu, an energy expert and partner at Lagos-based Megathos Law Practice.
"First, the security situation in Niger and neighbouring regions poses a substantial risk to the project's stability prior to construction and post-construction. Second, its dependency on the delayed and self-funded AKK pipeline introduces complexity and uncertainty."
Similarly, Aneliese Bernard, director of Strategic Stabilization Advisors, a Washington DC-based consultancy and a former State Department official, said security experts were concerned an Ecowas invasion could trigger an explosion of violence on the Nigeria-Niger border, where local leaders have kept a fragile peace, potentially bridging insecurity in both the Chad Basin and the wider Sahel complex.
Much of the Trans Saharan pipeline's $13 billion capital expenditure will be spent in Niger, which currently produces just 20,000 b/d of oil and scant gas, but is due to bring the 110,000 b/d Chinese-built Niger-Benin oil pipeline online soon.
The Trans Saharan pipeline project could enable Niger to monetize its significant recoverable gas reserves, estimated at 34 billion cubic meters (Bcm) according to Savannah Energy, the sole Western oil company operating in the country.
On the plus side, it could aid in addressing the prevalent issue of illicit fuel trading in the region.
Bernard further explained that the Trans-Saharan pipeline could explain Algeria's eagerness to mediate in the Niger crisis, after Mali and Burkina Faso – also led by military juntas – said they would assist Niger in the event of an Ecowas invasion.
"Algeria are throwing themselves into this. I think that is likely because of their investments and incentives to ensure that a pipeline continues to be developed," she said.
The North African country – which is also seeking to exploit elevated European gas demand – does not intend to support the Ecowas sanctions.
Uwadiae Osadiaye, an analyst at Lagos-based FBNQuest, suggested that the future of the pipeline project may hinge on whether Niger's military junta chooses to cooperate or engage in negotiations.
"If I am a member of the new government, I would consider it an opportunity for my country's economy," he said.
On the financial end, the 614 km Ajaokuta-Kaduna-Kano gas pipeline, has faced delays due to a funding shortage following the withdrawal of Chinese banks from the initiative, as reported by The Guardian.
Consequently, the Nigerian National Petroleum Corporation (NNPC), a state-run entity, is now responsible for bearing the financial burden of the project.
The pipeline is intended to transport gas from the southern Niger Delta to the energy-starved northern regions, supplying power plants and the Trans-Saharan pipeline.
As of April, the NNPC had sunk $1 billion into the project, which is 70% complete. Originally billed for completion in 2022, analysts say it could drag on unfinished for years.