Pipeline proceeds

West African

The leaders of Ghana, Nigeria, Togo and Benin have signed a treaty agreeing to the construction of the West Africa Gas Pipeline (WAGP) project. The 20 year agreement sets the criteria for the harmonisation of regulations, the creation of a legal framework and the foundation of a single WAGP authority to manage the project.

Development of the project has so far proceeded at a snail's pace, partly because of the number of companies and countries involved, and partly because of lingering doubts over its viability. The WAGP consortium consists of ChevronTexaco, with a 36.7% stake, Nigerian National Petroleum Corporation (NNPC) (25%), Shell (18%), Volta River Authority of Ghana (16.3%) and new gas companies being set up in Benin and Togo (2% each).

If construction can begin this year, the first gas could be supplied by the end of 2005. However, it is vital that marketing agreements with power companies in the region are signed before the end of the year; otherwise Ghana may opt for an agreement to buy gas from Cote d'Ivoire. The NNPC could help to drive through a deal, as it is desperate to secure markets for gas which is currently flared in Nigeria. The Lagos administration has set a deadline of 2008 for all gas flaring in the country to cease and marketing agreements need to be signed soon if this target is to be attained.

Another step forward in eliminating gas flaring was made at the start of this year, when Nigeria Liquefied Natural Gas (NLNG) agreed loans worth $1.6bn with a variety of banks, including $160m with Nigerian banking institutions. This is the first time that the company, owned by NNPC, Shell, TotalFinaElf and Eni-Agip, has opted for a loan arrangement rather than shareholder financing. The money is to be used to fund the expansion of the NLNG facilities in Nigeria to increase LNG exports to Europe.

Copyright International Communications Apr 2003
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